What’s the difference between a fiscal and calendar year?
- Calendar year - A calendar tax year is 12 consecutive months beginning January 1 and ending December 31.
- Fiscal year - A fiscal tax year is 12 consecutive months ending on the last day of any month except December.
In the U.S., a company's tax year is the same as its fiscal year. Tax returns must be filed by 15th day of the third month following the fiscal year end. For a fiscal year ending September 30, the return would be due by December 15.
If your company is sole proprietorship, you use the calendar tax year. S corporation, LLC or partnerships, typically use a calendar year. The IRS does make exceptions and can grant permission to use a Fiscal year tax year. Corporations can use either tax year.
Because the time between November 15 and January 15 is the busiest time of the year, having a tax year that ends earlier than December has a few benefits. Of course, there are other factors involved in choosing a fiscal year. You must talk with your accounting, tax and legal advisors to determine the best structure and fiscal year for your business and personal goals.
Bottom line, once you file your first return, you’re company is typically stuck with the tax year you use.