Is there a benefit to selecting a taxable year that is more apropos to a business? A client works the school season from September through May with few or no work in the school summer months or June to August. I have always done their taxes on the normal calendar year basis, but I have been considering whether we should move it to a fiscal year, and if so, when is the best time to do so?

ANSWER

The BIDaWIZ Team's Answer:

Can you provide a littler more background regarding the nature of the business and the size? Typically, calendar year is the simplest for accounting and record-keeping purposes. Having said that, there are exceptions to the rule. If you operate a seasonal business, reporting income on a calendar year basis could divide your season and provide for a distorted view of income and expenses. Having said that, if the business shows most of its expenses in one year and income in another, it may be worth looking into a fiscal tax year so that both periods are included in the same 12-month period. This is referenced in IRS Publication 538 and IRC Section 441.