Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Choosing A Fiscal Year

Posted by taxguru on July 11, 2004

I do hope my point in regard to seeking professional assistance is getting through, as in this recent email exchange.


I found your website on a search and had a simple question. If as you say Corporations should have a different Fiscal year from the Calendar year what month should you choose?

I am starting an private NV LLC that will be used for Investing. What month would be appropriate?

Thank You

My Reply:

This first thing you should discuss with your personal tax advisor is how the LLC is going to be treated for tax purposes; which obviously depends on whether there are more members than just you.

If it is to be treated as a sole proprietorship (if you are sole member) or partnership or S corp (multiple members), you have no choice in the fiscal year. It must be from January 1 through December 31.

If you choose to have the LLC taxed as a C corp, a tax year ending other than December has several benefits, as I described on my website. There is no universally applicable best month. However, I have found June 30 to be the most useful since it gives six months on either side to make any adjustments between the personal tax year-end of December 31.

I hope this help. Do not proceed any further without the assistance of a competent professional tax advisor. Most decisions made at the beginning cannot be changed later on; so you need to make sure they are the best for your situation.

Good luck.

Kerry Kerstetter

(No relation to the French-looking anti-American currently running for President)

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