There are many burdens that a business owner must endure in order to operate their company successfully. For example, a business owner should be familiar with how fiscal years work for a business and how it can affect a variety of financial matters for the business. If you need accounting assistance to determine when the fiscal year for your company begins and how a fiscal year works, you should consult with an experienced Roseville tax preparation and planning services accountant as soon as possible. The Cook CPA Group is prepared to work with you on a variety of financial matters that may substantially affect your business. We recognize the many financial matters that may arise for a business owner, and we would be pleased to help you address your concerns. The Cook CPA Group is here to discuss when a fiscal year begins for a business.
How Fiscal Years Work for a Business
If you recently started a company, you may be dealing with a number of issues regarding small business accounting. One of the most common issues for new business owners is determining how a fiscal year works in regard to profits, taxes, and many other issues. Our team of experienced Sacramento accountants can help you learn about what a fiscal year means to your company.
A fiscal year is a one-year span of time that businesses and state and federal governments utilize for purposes of financial reporting and adjusting financial budgets. While it is true that the fiscal year for a business can start on January 1st and conclude on December 31st, not every business will have the same fiscal year. Fiscal years can start on a timeframe that corresponds with the nature of a particular business. For example, a seasonal company may have a fiscal year that begins in the spring instead of January 1st.
Due to how a fiscal year can change depending on the industry a business operates in, it is normal for a business owner to be concerned about when taxes must be filed in accordance with their fiscal year. The Internal Revenue Service states that a fiscal year is 12 consecutive months, which concludes on the last day of any month except December.
Determining Your Company’s Fiscal Year
The fiscal year for a company is typically the end of a four-month quarter of a year. For example, September 30th may be the end of the third quarter of your fiscal year.
It is important to note that a business owner can begin their fiscal year on any date, subject to the business structure of your company. Note, however, that you must select a fiscal year as the IRS will require this information when tax season rolls around, and you need to file your tax return. As a result, the IRS enforces some requirements for fiscal years of a company.
If you operate your business as a sole proprietorship, the IRS requires that you use December 31st as your fiscal business year. Additionally, single-member LLCs must also use December 31st as their fiscal year. Normally, a partnership must also use the same fiscal year unless an exception applies.
There are certain circumstances where a business must use the calendar year as their fiscal year. For example, if you do not keep financial records for your business, you must use the calendar year. Additionally, you must also use a calendar year as your fiscal year for the following reasons:
- Your business does not have an annual accounting period
- The current tax years are not considered as your fiscal year
- The tax code requires that your business use a calendar year
To learn more about how to change your fiscal year, you should continue reading and speak with an experienced Roseville tax accountant.
How to Change the Fiscal Year for Your Business
If you believe that your current fiscal year does not benefit the nature of your business, you have the discretion to change your fiscal year provided that it complies with IRS regulations. To get started on changing your fiscal year, you will have to examine the by-laws or operating agreement for your company.
Note, however, that while your fiscal year is typically an internal company issue, you need IRS approval to change your tax year. You can utilize Form 1128 in order to adopt or alter your tax year. If you operate your company as a partnership or a corporation, you may be required to use Form 8716.
You should also be aware that starting your business in the middle of the year does not exempt you from filing taxes for that year. Instead, you must adjust your taxes in accordance with the shorter amount of time you have to file. Our experienced CPAs can help you file your taxes for a shorter tax year.
Consult with Our Experienced California Business Accountants to Discuss Your Fiscal Year
If you require accounting services to efficiently manage your business, you should consult with an experienced California business services accountant. The skilled accountants at the Cook CPA Group possess a wealth of experience providing accounting services for businesses in a variety of industries, and we are to offer you accounting services for your company. You do not have to manage various complex financial matters for your business alone. To schedule a free consultation to discuss your accounting needs, contact the Cook CPA Group at (916) 432-2218. You may also contact our team of accountants online to schedule your free consultation today.