| Death and taxes are those two things you can never | | | | fiscal year, which can cause your books to get out of |
| escape. When forming a corporation, making your tax | | | | whack at the end of the year. A middle year |
| year designation is a fundamental step you need to | | | | designation avoids this and offers other leveraging |
| take carefully. | | | | opportunities. |
| Taxes are defined by something magical known as | | | | So, what about an "S" corporation? The S corporation |
| the fiscal year. It is a 365 day period that defines a | | | | is tailored to small businesses and lets them pass |
| business year for a business. With a sole | | | | through business finances to personal tax returns |
| proprietorship, the fiscal year is automatically the | | | | much like a partnership. Because of this tie in to the |
| calendar year - from January 1st through December | | | | personal returns of shareholders, an "S" corporation is |
| 31st. The same, obviously, goes for your personal tax | | | | not allowed to designate a tax year other than the |
| returns. | | | | calendar year. Put another way, the year has to be |
| Corporations run a bit different when it comes to tax | | | | January 1st through December 31st. |
| year designations. In certain situations, you get to | | | | If you form a corporate entity, it is highly |
| designate the fiscal year. Specifically, a traditional C | | | | recommended that you hire a CPA to help handle the |
| corporation may designate its fiscal year as any 365 | | | | tax situation. Corporate tax law is entirely different |
| day period. For example, I might form a corporation | | | | than personal tax law. There is a lot of room to |
| and pick a fiscal year running from July 15th of one | | | | implement tax reduction strategies, but usually only if |
| year to July 14th of the following one. | | | | you take the necessary steps form the very outset of |
| There are certainly some advantages to tweaking | | | | the corporate filing. In short, spending a bit of money on |
| fiscal years with C corporations. Most businesses | | | | a CPA now can save you a ton of money down the |
| spend money like mad at the end of the calendar | | | | road, so do it! |