Taxes: Calendar Year Or Fiscal Year? Is One A Better Option Over Another?

[ladyboss]

Hey guys,

On the SS-4 form it asks for the closing month of accounting year. But I am uncertain what to put down.
I have had my business registered as a DBA since April of last year, but due to unforeseen circumstances,
haven't gotten it off the ground yet.

I am a sole proprietor and will have one freelancer doing contract work for me. I consult and produce
marketing videos.

Just thought I'd inquire to see how I can determine which would be the best option for me.
Or does it just come down to personal preference? Could use a bit of clarity so I can make
a more informed decision. Thanks!

[tallen]

Do you anticipate your business having a natural cycle that would make some fiscal year a better fit than the calendar year? For example, schools and institutions of higher education usually use a July 1 to June 30 fiscal year because it better corresponds to the traditional academic / school year.

One of the businesses I am involved with uses a December 1 to November 30 fiscal year, so that we (as a cash-accounting basis business) can start taking deposits from customers for the next summer season when they are planning their familiy's next summer vacation -- between Thanksgiving and Christmas....

I think the calendar year is the easiest unless you have a compelling reason for something different. If you do go for something different, consider whether there might be an advantage to aligning with the traditional quarters (e.g. so your fiscal year ends on March 31, June 30, or September 30.... or December 31, of course) -- payroll taxes and many other things follow that calendar regardless of what fiscal year you choose.