Fiscal year and taxes


P

paul.hung

Hi everyone,

Looking for a little help...

I just started and incorporated a business last year at around the same
time (June '05). When I incorporated, I (a bit haphazardly perhaps)
indicated that my fiscal year would start in June as well. Well, now
I'm confused as it's tax time, and the end of my fiscal year hasn't
come yet. Do I report everything thus far since June '05 and then
report the remainder of the first half of '06 next April? Although
that makes the first two years of my business seem a little off, it
seems to be the logical thing to do...

Thanks everyone,

Paul
 
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P

Paul Thomas, CPA

I just started and incorporated a business last year at around the same
time (June '05). When I incorporated, I (a bit haphazardly perhaps)
indicated that my fiscal year would start in June as well. Well, now
I'm confused as it's tax time,

For you, as an individual, yes.

Your corporation has a fiscal year-end of May 31 (or so it would seem from
what you posted).

and the end of my fiscal year hasn't come yet.
For the corporation, yes.


Do I report everything thus far since June '05 and then
report the remainder of the first half of '06 next April?

No. You will file Corporate Form 1120 for the 12 months running from June 1
through May 31. That return would be due two and a half months after the
close of your fiscal year-end (August 15th).



Although that makes the first two years of my business
seem a little off, it seems to be the logical thing to do...

You have the time, so make plans to see a tax professional at the end of
April or early May so you cna plan your corporate year-end. You'll also
need help with preparing and filing all the required forms and schedules.

On second thought, you may need to meet with someone now, to be sure that
any and all calander year-end reporting has been done correctly. You may
have business licenses to renew, property tax reports to get filed, and the
preparation and filing of forms 1099 and W-2's to any contractors and/or
employees.
 
B

Beverly

What many people don't realize is that April 15th as "tax day" is
simply representative of taxes being due on the 15th day of the fourth
month following the close of a fiscal year. Personal "fiscal years"
coincide with the calendar year, but if your business's fiscal year
began on June 1, 2005, it will end on May 31, 2006. The 15th day of
the fourth month following would cause your corporate taxes to be due
on September 15th, NOT April 15th.

Of course, any distributions made or payroll paid in 2005 would
require appropriate forms to be sent to appropriate people at the
beginning of the calendar year and their PERSONAL taxes on said income
would be due by April 15th, the corporation's taxes would not be due
at this time.

The only reason you would want to file corporate taxes as a partial
year is if you intend to change fiscal years. See IRS publication
538.

Hi everyone,

Looking for a little help...

I just started and incorporated a business last year at around the same
time (June '05). When I incorporated, I (a bit haphazardly perhaps)
indicated that my fiscal year would start in June as well. Well, now
I'm confused as it's tax time, and the end of my fiscal year hasn't
come yet. Do I report everything thus far since June '05 and then
report the remainder of the first half of '06 next April? Although
that makes the first two years of my business seem a little off, it
seems to be the logical thing to do...

Thanks everyone,

Paul
Beverly
 
P

Paul Thomas, CPA

Beverly said:
What many people don't realize is that April 15th as "tax day" is
simply representative of taxes being due on the 15th day of the fourth
month following the close of a fiscal year. Personal "fiscal years"
coincide with the calendar year, but if your business's fiscal year
began on June 1, 2005, it will end on May 31, 2006. The 15th day of
the fourth month following would cause your corporate taxes to be due
on September 15th, NOT April 15th.

Take note that corporate returns ~do not~ have three and a half months to
prepare and file their returns. Even calander year-end corporations have
till March 15th to file.
 
B

Beverly

Take note that corporate returns ~do not~ have three and a half months to
prepare and file their returns. Even calander year-end corporations have
till March 15th to file.
I will defer to you. I was using the 15th of the 4th month as
indicated on the IRS web site, but had wondered why calendar year
corporations only had until March 15th.

Beverly
 
B

brecker

I vaguely remember something about corporations not being able to have a tax
year end that ware more or less than three months from December year end,
with the exception being non-profits. Thus, C-corps could only be anywhere
from Sep through March. Even more strict rules for LLCs, LLPs, etc.

I didn't do the research.. Either way, why not just file for a December year
end? Since the corporation was started just this year, file the forms and
change to tax year to coincide with the calendar year.
 
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P

Paul Thomas, CPA

brecker said:
I vaguely remember something about corporations not being able to have a
tax year end that ware more or less than three months from December year
end, with the exception being non-profits. Thus, C-corps could only be
anywhere from Sep through March. Even more strict rules for LLCs, LLPs,
etc.
No such rules exist for "C" corporations, which can have fiscal year ends
almost any time. And with the exceptions for the 52/53 week year corps,
almost all have year-ends related to their incorporation date, ending on the
month end prior to their incorporation date. If a company incorporated on
June 20th, their year-end date would be May 31. They have the option to
elect in year 1 a calander year end, and can change year-ends (from fiscal
to calander) pretty easily at a later date.


I didn't do the research.. Either way, why not just file for a December
year end? Since the corporation was started just this year, file the forms
and change to tax year to coincide with the calendar year.

There could be lots of reasons. Why would a ski operation want a December
year-end? Wouldn't it make better sense for them to have like a July
year-end? That way they have the entire annual cycle of income and expenses
wrapped up on one return. And a summer rafting business would want, say a
December year end for similar reasons.
 

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