What fiscal year should my books use, and what changes if it isn't the calendar year?

What a fiscal year is, and what in your books depends on it

A fiscal year is the twelve-month period over which an entity reports the activities appearing in its annual financial statements. (jurisdiction: United States (US-published professional accounting reference; the definition is stated in general terms, without a jurisdiction limit of its own), entity_scope: any entity that issues annual financial statements)

“A fiscal year is the twelve-month period over which an entity reports on the activities that appear in its annual financial statements .”

The author distinguishes two namings of an accounting year: an accounting year running January 1 through December 31 is known as a calendar year, while an accounting year not ending on December 31 is a fiscal year. (jurisdiction: United States (U.S.-oriented accounting reference), entity_scope: businesses and other organizations generally, as used in this explanatory reference)

“A fiscal year is an accounting year that does not end on December 31. (Accounting years of January 1 through December 31 are known as calendar years .)”

The fiscal year period does not have to correspond to the calendar year. (jurisdiction: United States (US-published professional accounting reference; stated in general terms), entity_scope: any entity that issues annual financial statements)

“This period does not have to correspond to the calendar year.”

A fiscal year is named/referred to by the date on which it ends. (jurisdiction: United States (US-published professional accounting reference; stated in general terms), entity_scope: entities reporting a fiscal year)

“A fiscal year is referred to by the date on which it ends.”

Taxable income must be figured on the basis of a tax year, and a tax year is an annual accounting period for keeping records and reporting income and expenses. (jurisdiction: United States (federal), entity_scope: taxpayers figuring taxable income (page addressed to small business and self-employed filers), accounting_basis: US federal income tax)

“You must figure your taxable income on the basis of a tax year. A "tax year" is an annual accounting period for keeping records and reporting income and expenses.”

Partly established. Established: what the fiscal year is in a set of books (S01, S02); the year-end date as depending on the fiscal year (S02, S04). Missing: the annual roll-forward as depending on the fiscal year; comparative reporting as depending on the fiscal year; cumulative figures as depending on the fiscal year.

Required authority: authoritative professional or accounting standard. Highest achieved: high quality professional secondary reference.

How the annual period drives the year-end date, comparatives and interim labels

Partly established. Established: the definition of the fiscal or annual reporting period in a set of books (S01, S02); the role of the fiscal or annual reporting period in a set of books (S01); the year-end date itself, and how it moves when the books are kept on something other than the calendar year (S02); when the year-end work falls, and how it moves when the books are kept on something other than the calendar year (S13); the labelling of interim periods, and how it moves when the books are kept on something other than the calendar year (S34). Missing: the alignment of comparative columns, and how it moves when the books are kept on something other than the calendar year.

Required authority: authoritative professional or accounting standard. Highest achieved: high quality professional secondary reference, official platform documentation, primary regulator or government.

What limits the choice: the annual period your entity is required or permitted to use

Where the taxpayer does not have a required tax year, a tax year is adopted by filing the first income tax return using that tax year. (jurisdiction: United States (federal), entity_scope: taxpayers without a required tax year, accounting_basis: US federal income tax, conditions: taxpayer does not have a required tax year)

“Unless you have a required tax year, you adopt a tax year by filing your first income tax return using that tax year.”

A taxpayer whose first tax return used the calendar tax year and who later begins business as a sole proprietor, becomes a partner in a partnership, or becomes an S corporation shareholder must continue using the calendar year, unless IRS approval to change is obtained or one of the exceptions in the Form 1128 instructions is met. (jurisdiction: United States (federal), entity_scope: individual who filed a first return on the calendar tax year and later becomes a sole proprietor, a partner in a partnership, or a shareholder in an S corporation, accounting_basis: US federal income tax, conditions: first tax return filed using the calendar tax year; exception where IRS approval to change is obtained; exception where one of the exceptions listed in the Form 1128 instructions is met)

“If you file your first tax return using the calendar tax year and you later begin business as a sole proprietor, become a partner in a partnership, or become a shareholder in an S corporation, you must continue to use the calendar year unless you get IRS approval to change it or meet one of the exceptions listed in the instructions to Form 1128, Application To Adopt, Change, or Retain a Tax Year .”

An S corporation must have a permitted tax year unless it has made a section 444 election to have a tax year other than the required tax year. (jurisdiction: United States — federal income tax, entity_scope: S corporations, accounting_basis: US federal income tax year, conditions: exception where a section 444 election has been made)

“An S corporation must have a permitted tax year unless it has elected under section 444 to have a tax year other than the required tax year.”

A partnership must obtain advance IRS approval to adopt, change, or retain a tax year unless it is not required to file Form 1128 or it meets one of the Part II, Section B automatic approval rules. (jurisdiction: United States — federal income tax, entity_scope: partnerships, accounting_basis: US federal income tax year, conditions: exceptions where Form 1128 is not required or an automatic approval rule is met)

“A partnership must obtain advance approval from the IRS to adopt, change, or retain a tax year unless it is not required to file Form 1128, or it meets one of the automatic approval rules discussed earlier in the instructions for Part II, Section B.”

Not established from an authoritative source.

The annual accounting periods a US business may adopt

See Taxable income must be figured on the basis of a tax year, and a tax year is an annual accounting period for keeping records and reporting income and expenses.

One of the tax years listed as usable is the calendar year, defined as 12 consecutive months beginning January 1 and ending December 31. (jurisdiction: United States (federal), entity_scope: taxpayers generally, accounting_basis: US federal income tax)

“Calendar year – 12 consecutive months beginning January 1 and ending December 31.”

Generally anyone can adopt the calendar year, but the calendar year must be adopted if any of the circumstances the page then lists apply. (jurisdiction: United States (federal), entity_scope: taxpayers generally, accounting_basis: US federal income tax, conditions: mandatory only where one of the listed circumstances applies)

“Generally, anyone can adopt the calendar year. However, if any of the following apply, you must adopt the calendar year.”

Partly established. Established: how that requirement constrains the period the books are kept on and reported against (S05). Missing: which annual accounting periods a United States business of a given entity form is required or permitted to adopt.

When a non-calendar year is the better business choice

A fiscal year allows a business to close its books during a down period in its business cycle, when there are fewer outstanding transactions, which makes closing the books more cost-effective. (jurisdiction: United States (US-published professional accounting reference; stated in general terms), entity_scope: businesses choosing a fiscal year in place of the calendar year, conditions: stated as an advantage, not a requirement)

“First, it allows a business to close its books during a down period in its business cycle, when there are fewer outstanding transactions. This makes it more cost-effective to close the books.”

Setting a fiscal year-end away from the audit firm's normal busy season can result in lower audit fees, because auditors may charge lower rates to work in those periods. (jurisdiction: United States (US-published professional accounting reference; stated in general terms), entity_scope: audited businesses selecting a year-end, conditions: hedged: "can result", "may charge")

“And third, setting a fiscal year-end away from the normal busy season of their audit firms can result in lower audit fees, since the auditors may charge lower rates to work during these periods.”

Large retailers often — not always — end their fiscal years on the Saturday closest to January 31, in order to bring sales returns from their peak December sales into the same year. (jurisdiction: United States (U.S.-oriented accounting reference), entity_scope: large retailers, conditions: stated as a frequent, not universal, practice)

“Large retailers often end their fiscal years on the Saturday closest to January 31 in order to include sales returns from its peak December sales.”

NRF states that the 4-5-4 layout lines up holidays and gives comparable months the same number of Saturdays and Sundays, so that like days are compared to like days for sales reporting purposes. (jurisdiction: United States (NRF, a US retail trade association based in Washington, DC, publishing for the US retail industry), entity_scope: retailers using the 4-5-4 calendar, conditions: stated for sales reporting purposes)

“The layout of the calendar lines up holidays and ensures the same number of Saturdays and Sundays in comparable months. Hence, like days are compared to like days for sales reporting purposes.”

Choosing a year-end that fits your operating cycle

The twelve-month span chosen as the fiscal year usually — not always — corresponds to the entity's natural business cycle. (jurisdiction: United States (US-published professional accounting reference; stated in general terms), entity_scope: entities choosing a fiscal year, conditions: hedged: "usually")

“The span chosen usually corresponds to the natural business cycle of an entity.”

See A fiscal year allows a business to close its books during a down period in its business cycle, when there are fewer outstanding transactions, which makes closing the books more cost-effective.

Closing at the end of a fiscal year gives readers of the financial statements a clearer view of the firm's results over its natural business cycle. (jurisdiction: United States (US-published professional accounting reference; stated in general terms), entity_scope: companies whose fiscal year matches their natural business cycle, conditions: stated as an advantage, not a requirement)

“Second, closing at the end of a fiscal year gives the readers of a company’s financial statements a clearer view of a firm’s results over its natural business cycle.”

In the retail industry the fiscal year typically (not always) ends in January, so that the year encompasses holiday sales. (jurisdiction: United States (US-published professional accounting reference; example not qualified by country in the text), entity_scope: retail industry businesses, conditions: hedged: "typically"; given as an example)

“Retail industry . The fiscal year typically ends in January, to encompass holiday sales.”

Setting the year in your accounting system, and what that setting controls

QuickBooks Online sets the fiscal year by a "First month of fiscal year" dropdown in the Accounting section of Advanced settings, from which the user selects the month the fiscal year starts. (jurisdiction: United States (QuickBooks Online US/en-US help edition), entity_scope: QuickBooks Online users, platform: QuickBooks Online, platform_edition: US edition; article updated 8/21/2026)

“In the Accounting section, select the First month of fiscal year ▼ dropdown, then select the month you start your fiscal year.”

The period covered by a report in a management report is set by choosing a date range in the Report period dropdown. (jurisdiction: United States (QuickBooks Online US/en-US help edition), entity_scope: QuickBooks Online users building a management report, platform: QuickBooks Online, platform_edition: US edition; article updated 8/21/2026)

“Select a date range in the Report period ▼ dropdown.”

After finishing the year-end review of financial data, a user can close the books, which prevents unwanted changes that could affect reports before sales tax is filed. (jurisdiction: United States (QuickBooks Online US/en-US help edition; sales tax filing), entity_scope: QuickBooks Online users who have completed the year-end review, platform: QuickBooks Online, platform_edition: US edition; article updated 8/21/2026, conditions: year-end review of financial data is finished)

“When you finish the year-end review of your financial data, you can close your books . This prevents unwanted changes that could affect your reports before you file your sales tax.”

Sage 50 automatically adjusts the dates of the accounting periods, so the help states it is generally not necessary for the user to change them manually. (jurisdiction: United States (Sage 50 U.S. product help, en-us), entity_scope: companies whose books are kept in Sage 50, platform: Sage 50 (U.S.), platform_edition: 2026 help edition, conditions: hedged as 'generally' not necessary, not a prohibition on manual change)

“However, since Sage 50 automatically adjusts the dates of the accounting periods, it is generally not necessary to make changes to them yourself.”

The help states that rules govern changes to the date range of accounting periods, and advises consulting your accountant, if in doubt, before making any changes; it does not state what those rules are. (jurisdiction: United States (Sage 50 U.S. product help, en-us), entity_scope: companies whose books are kept in Sage 50, platform: Sage 50 (U.S.), platform_edition: 2026 help edition, conditions: advice is conditioned on 'If in doubt'; the rules themselves are not identified in this document)

“There are rules governing changes to the date range of accounting periods. If in doubt, consult your accountant before making any changes.”

Changing an accounting period's 'To' date automatically changes the 'From' date of the next accounting period as well. (jurisdiction: United States (Sage 50 U.S. product help, en-us), entity_scope: companies whose books are kept in Sage 50, platform: Sage 50 (U.S.), platform_edition: 2026 help edition, conditions: applies when the user edits a 'To' date in this window)

“When you change the To date, the From date in the next accounting period automatically changes also.”

Clicking Next from this window continues the year-end close process, and Sage 50 then displays the Confirm Year-End Close window. (jurisdiction: United States (Sage 50 U.S. product help, en-us), entity_scope: companies whose books are kept in Sage 50, platform: Sage 50 (U.S.), platform_edition: 2026 help edition, conditions: within the Year-End wizard sequence following the New Open Fiscal Years window)

“When finished, click Next to continue the year-end close process. Sage 50 displays the Confirm Year-End Close window.”

Partly established. Established: how the annual period is set in the accounting system (S20, S23, S25). Missing: what that setting controls in reporting; what that setting controls in closing; what that setting controls in cumulative figures.

How small-business accounting systems implement the fiscal-year setting

The path to the fiscal-year setting begins at Settings, where the user selects Account and settings. (jurisdiction: United States (QuickBooks Online US/en-US help edition), entity_scope: QuickBooks Online users, platform: QuickBooks Online, platform_edition: US edition; article updated 8/21/2026)

“Go to Settings and select Account and settings .”

Within Account and settings, the fiscal-year setting is reached by selecting the Advanced tab. (jurisdiction: United States (QuickBooks Online US/en-US help edition), entity_scope: QuickBooks Online users, platform: QuickBooks Online, platform_edition: US edition; article updated 8/21/2026)

“Select Advanced .”

See QuickBooks Online sets the fiscal year by a "First month of fiscal year" dropdown in the Accounting section of Advanced settings, from which the user selects the month the fiscal year starts.

The fiscal-year month selection is committed by selecting Save and then Done. (jurisdiction: United States (QuickBooks Online US/en-US help edition), entity_scope: QuickBooks Online users, platform: QuickBooks Online, platform_edition: US edition; article updated 8/21/2026)

“Select Save , then select Done .”

In the Sage 50 Year-End wizard's New Open Fiscal Years window, the user can review the accounting periods of the current open fiscal year and of the next fiscal year. (jurisdiction: United States (Sage 50 U.S. product help, en-us), entity_scope: companies whose books are kept in Sage 50, platform: Sage 50 (U.S.), platform_edition: 2026 help edition, conditions: applies to the New Open Fiscal Years window of the Year-End wizard; some features described may not be available depending on the purchase agreement)

“In this window, the Sage 50 Year-End wizard lets you review the accounting periods in your current open fiscal year and next fiscal year.”

Where a company needs to restructure its next fiscal year for tax purposes, Sage 50 allows the user to change the date range of the accounting periods in that next fiscal year. (jurisdiction: United States (Sage 50 U.S. product help, en-us), entity_scope: companies whose books are kept in Sage 50, platform: Sage 50 (U.S.), platform_edition: 2026 help edition, conditions: stated for the next fiscal year in the New Open Fiscal Years window; framed as a need to restructure the year for tax purposes)

“If you need to restructure your company's next fiscal year for tax purposes, you can change the date range of the accounting periods in that year.”

For the current open fiscal year, the table at the right of the window shows the dates of each accounting period in that year and is read-only, so the user can review but not change those dates. (jurisdiction: United States (Sage 50 U.S. product help, en-us), entity_scope: companies whose books are kept in Sage 50, platform: Sage 50 (U.S.), platform_edition: 2026 help edition, conditions: applies to the display shown after clicking 'Current Fiscal Year')

“The table at the right side of the window shows the dates of each accounting period in the year. This display is read-only, meaning you can only review the dates, not change them.”

Not established from an authoritative source.

What a non-calendar year changes — and what stays fixed to the calendar

A taxpayer filing an income tax return for a fiscal year rather than the calendar year must change some of the dates in the General Tax Calendar. (jurisdiction: United States (federal tax law, IRS), entity_scope: income tax filers using a fiscal year, effective_from: 2026, conditions: only 'some' of the dates change)

“If you file your income tax return for a fiscal year rather than the calendar year, you must change some of the dates in this calendar. These changes are described under Fiscal-Year Taxpayers at the end of this calendar.”

The three months making up each quarter of a fiscal year may differ from the months of each calendar quarter, depending on when the fiscal year begins. (jurisdiction: United States (federal tax law, IRS), entity_scope: taxpayers whose tax year is a fiscal year, effective_from: 2026, conditions: hedged: 'may be different', 'depending on when the fiscal year begins')

“The 3 months that make up each quarter of a fiscal year may be different from those of each calendar quarter, depending on when the fiscal year begins.”

The dates in the Employer's Tax Calendar apply whether the taxpayer's tax year is a fiscal year or the calendar year, the only exception stated being the filing date for Form 5500 series forms. (jurisdiction: United States (federal tax law, IRS), entity_scope: employers, whether on a fiscal year or the calendar year, effective_from: 2026, conditions: exception stated for the Form 5500 series)

“The dates in this calendar apply whether you use a fiscal year or the calendar year as your tax year. The only exception is the date for filing forms in the Form 5500 series, for example, Forms 5500, Annual Return/Report of Employee Benefit Plan, and 5500-EZ, Annual Return of A One-Participant (Owners/Partners and Their Spouses) Retirement Plan or A Foreign Plan.”

Partly established. Established: year-end timing as something a non-calendar year changes (S13); the close calendar as something a non-calendar year changes (S13); interim labelling as something a non-calendar year changes (S34); the recurring obligations that remain fixed to the calendar regardless of the books' year (S35). Missing: comparative alignment as something a non-calendar year changes.

Required authority: authoritative professional or accounting standard, primary regulator or government. Highest achieved: high quality professional secondary reference, primary regulator or government.

Reporting and filing cycles that do not move with your books' year

Form 940, the employer's annual FUTA tax return, is due the last day of the first calendar month after the calendar year ends. (jurisdiction: United States (federal tax law, IRS), entity_scope: employers liable for FUTA tax, effective_from: 2026, conditions: due date is tied to the calendar year, not the taxpayer's tax year)

“Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return. This form is due the last day of the first calendar month after the calendar year ends.”

Form 941, the employer's quarterly federal tax return, is due the last day of the first calendar month after the calendar quarter ends. (jurisdiction: United States (federal tax law, IRS), entity_scope: employers filing Form 941, effective_from: 2026, conditions: due date is tied to the calendar quarter, not the taxpayer's tax year)

“Form 941, Employer’s QUARTERLY Federal Tax Return. This form is due the last day of the first calendar month after the calendar quarter ends.”

See The dates in the Employer's Tax Calendar apply whether the taxpayer's tax year is a fiscal year or the calendar year, the only exception stated being the filing date for Form 5500 series forms.

For sales tax accounts on the yearly reporting basis, the reporting period is January through December, the period end date is December 31, and the return is due January 31 — the annual reporting period runs on the calendar year. (jurisdiction: California, United States, entity_scope: CDTFA sales tax accounts assigned the yearly reporting basis)

“January – December December 31 January 31”

Partly established. Established: that those cycles do not move when the books run on a non-calendar annual period (S35). Missing: which recurring reporting and filing cycles a business faces are fixed to the calendar.

Changing an established year later: approval, and a short transition period

Generally, taxpayers must file Form 1128 to adopt, change, or retain a tax year, subject to the exceptions set out later in the instructions. (jurisdiction: United States — federal income tax, entity_scope: taxpayers generally, subject to listed exceptions, accounting_basis: US federal income tax year, conditions: hedged with "Generally"; exceptions listed separately in the instructions)

“Generally, taxpayers must file Form 1128 to adopt, change, or retain a tax year. However, see Exceptions , later.”

Form 1128 offers two approval routes: Part II for an automatic approval request, and Part III for a ruling request where the applicant does not qualify for automatic approval. (jurisdiction: United States — federal income tax, entity_scope: applicants filing Form 1128, accounting_basis: US federal income tax year)

“Part II is used for an automatic approval request. If the applicant does not qualify for automatic approval, Part III is used for a ruling request.”

Changing the accounting period is one of the listed situations in which a short period tax return may be required. (jurisdiction: United States (federal), entity_scope: taxable entities changing their accounting period, accounting_basis: US federal income tax, conditions: governing lead-in says a short period return "may be required")

“Change your accounting period.”

When an applicant changes a tax year, the required short period return covers the period beginning the day after the close of the old tax year and ending the day before the first day of the new tax year, usually a period of less than 12 months. (jurisdiction: United States — federal income tax, entity_scope: applicants changing a tax year, accounting_basis: US federal income tax year, conditions: length hedged as "usually" less than 12 months)

“If the applicant is changing a tax year, the required short period return (usually for a period of less than 12 months) is for the period that begins on the day following the close of the old tax year and ends on the day before the first day of the new tax year.”

Partly established. Established: that changing an established annual period later is a governed change (S44); the approval or notification requirement the change carries (S44, S45); the transition period the change produces (S46). Missing: what that does to the ledger; what that does to comparatives.

Required authority: authoritative professional or accounting standard, primary regulator or government. Highest achieved: primary regulator or government.

The process for changing an annual accounting period you have already adopted

The instructions state that section 442 requires IRS approval to adopt, change, or retain a tax year, and that obtaining that approval requires filing an application. (jurisdiction: United States — federal income tax (Internal Revenue Code), entity_scope: taxpayers adopting, changing, or retaining a tax year, accounting_basis: US federal income tax year (annual accounting period), conditions: as stated in the 11/2017 revision of the Form 1128 instructions)

“Section 442 says that you must obtain IRS approval if you want to adopt, change, or retain a tax year. To obtain approval, you must file an application to adopt, change, or retain a tax year.”

After a tax year has been adopted, IRS approval may have to be obtained in order to change it. (jurisdiction: United States (federal), entity_scope: taxpayers that have adopted a tax year, accounting_basis: US federal income tax, conditions: stated as "may have to", not in every case)

“Once you have adopted your tax year, you may have to get IRS approval to change it.”

Obtaining IRS approval to change a tax year requires filing Form 1128. (jurisdiction: United States (federal), entity_scope: taxpayers seeking IRS approval to change a tax year, accounting_basis: US federal income tax, conditions: the page directs readers to the Form 1128 instructions for exceptions)

“To get approval, you must file Form 1128 PDF .”

For a change in tax year, the first effective year is the short period required to effect the change — i.e. a change in tax year produces a short transition period. (jurisdiction: United States — federal income tax, entity_scope: taxpayers changing a tax year, accounting_basis: US federal income tax year, conditions: applies to a change in tax year (not to adoption or retention))

“In the case of a change in tax year, the first effective year is the short period required to effect the change.”

What a change of annual period does inside the ledger and to comparative columns

Partly established. Established: the short transition period that appears in the ledger (S46, S50). Missing: how the closing roll-forward carries across the transition period; how the opening balances carry across the transition period; why comparative columns that span the change are not like-for-like.

Required authority: authoritative professional or accounting standard. Highest achieved: primary regulator or government.

Keeping the books, your preparer and any lender on the same annual period

See Taxable income must be figured on the basis of a tax year, and a tax year is an annual accounting period for keeping records and reporting income and expenses.

See Where the taxpayer does not have a required tax year, a tax year is adopted by filing the first income tax return using that tax year.

See QuickBooks Online sets the fiscal year by a "First month of fiscal year" dropdown in the Accounting section of Advanced settings, from which the user selects the month the fiscal year starts.

See The help states that rules govern changes to the date range of accounting periods, and advises consulting your accountant, if in doubt, before making any changes; it does not state what those rules are.

Not established from an authoritative source.

Required authority: authoritative professional or accounting standard, official platform documentation, primary regulator or government. Highest achieved: official platform documentation, primary regulator or government.

Stating the period covered whenever you hand figures to an outside reader

Partly established. Established: the requirement that figures drawn from the books be reported against the annual period the books are kept on (S05). Missing: that the period covered be stated whenever figures are given to a preparer, a lender or another external reader; what a mismatch between the period assumed and the period reported does to the figures that reader relies on.

Required authority: authoritative professional or accounting standard. Highest achieved: primary regulator or government.