Fiscal year and taxes


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
Reply to
paul.hung

wrote
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).
For the corporation, yes.
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).
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.
Reply to
Paul Thomas, CPA

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.
Beverly
Reply to
Beverly

"Beverly" wrote
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.
Reply to
Paul Thomas, CPA

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
Reply to
Beverly

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.
Reply to
brecker

"brecker" wrote
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.
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.
Reply to
Paul Thomas, CPA

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