Companies with a C corporation organization should consider using a fiscal year other than the calendar year for accounting and tax returns. Consultant Steve Maltzman, president of SMA Consulting in Colton, Calif., feels the option allows owners to plan for taxes and to place personal salary in a different year than corporate profit.
Silver Spring, Md., remodeler John Tabor is considering converting from the calendar year to a fiscal year ending in February. Tabor Construction has low revenues in January and February. When he pays taxes for the calendar year ending in December, he empties his account before this slow period. “If we change it to March, we'd go through our slow season with savings. Then in March the work picks up, and I get lots of deposits,” he says.
In the past, he made large expenditures at the end of the year to help with the calendar year taxes. With a fiscal year ending in March, he won't have to do that.