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Tax & Compliance
Fiscal Year
Definition
A 12-month period used for accounting and tax purposes, which may differ from the calendar year.
Overview
A fiscal year can start on any date. Some businesses use non-calendar fiscal years for operational or tax reasons. Most small businesses use the calendar year.
Example
A retail business uses a fiscal year from February 1 to January 31 to include holiday season results in one year.
Best Practices
Choose a fiscal year that aligns with your business cycle. Consistency is key.
Common Mistakes to Avoid
Inconsistent year-end dates
Not understanding tax implications
Poor planning for year-end
Frequently Asked Questions
Can I choose any fiscal year?
Sole proprietors must use calendar year. Other entities have more flexibility but restrictions apply.