Picking Your Year
Before you start setting up your accounts, you need to make one more decision. You need to pick a tax year. As a business, you can operate on a 12-month basis that is different from the calendar year, which begins in January and ends in December. If you think it makes business sense, you may want to operate under a different 12-month period. For example, many colleges operate from September 1 to August 31 because this time period is a better match to their actual operations. This kind of setup is called operating on a fiscal year basis. However, a partnership’s tax year must match the tax year of its partners, which is generally a calendar year if the partners are individuals.
A fiscal year is a 12-month period ...