Imagine that a business is set to begin its operations on May 1, but have opted to use a calendar year. Their first tax return will only cover the period from their first day of operations, May 1, through the end of https://kelleysbookkeeping.com/claim-these-above/ the year, December 31. Unless a business has a required tax year, as stipulated by the IRS, its tax return due date is determined by the fiscal year’s end set by the company and, if necessary, approved by the IRS.

A fiscal year is a one-year period that companies and governments use for financial reporting and budgeting. A fiscal year is most commonly used for accounting purposes to prepare financial statements. Although a fiscal year can start on Jan. 1 and end on Dec. 31, not all fiscal years correspond with the calendar year.

Tax Years

If you’re a sole proprietor, partnership or an S corporation, you need to get permission from the IRS before adopting a fiscal year. Another reason some smaller businesses close out their books on dates other than December 31 is that many accountants will offer a discount for being able to complete the needed work at another time of year. Having to squeeze in one more client’s fourth quarter paperwork over the December holidays is not appealing to many accountants.

A fiscal year-end is usually the end of any quarter, such as March 31, June 30, September 30, or December 31. CRI is a member of PrimeGlobal, a worldwide association of independent accounting firms and business advisors. Each independent member of PrimeGlobal is a separate firm and an independent legal entity. PrimeGlobal is not a partnership and independent member firms are not acting as agents of PrimeGlobal or other independent member firms. Companies must also consider the tax year that other businesses in their industry are using.

Make the Right Choice for Your Business

Apple Inc. ends its fiscal year every year on the last Saturday of September, whatever date that is each year. Microsoft Corporation (MSFT) ends its fiscal year on the last day of June every year. Before you choose how to determine your company’s How To Determine Your Companys Fiscal Year fiscal year, review your options and the various advantages and disadvantages with your accounting professional. Unless you have a required tax year, you adopt a tax year by filing your first income tax return using that tax year.

• Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader.
• So that means that if their fiscal year ends on July 31, their return would need to be filed by October 15.
• He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses.
• A variation of a fiscal year is the 52–53-week fiscal year, which doesn’t have to end on the last day of the month.
• A fiscal year is a one-year period that companies and governments use for financial reporting and budgeting.

As another example, the best time for a luxury resort to report earnings is probably after vacation season, so it may choose a fiscal year-end of Sept. 30. If a company has a fiscal year-end that is the same as the calendar year-end, it means that the fiscal year ends on Dec. 31. However, companies have the ability to choose the best fiscal year-end for themselves, designed with the needs of the company in mind. Companies that operate on a non-calendar business cycle or have a supplier base that does so may choose a fiscal year-end date that more appropriately coincides with their business operations.