Key Takeaways

  • The “last month of fiscal year LLC” determines when your accounting year ends and significantly impacts tax filing deadlines and planning.
  • LLCs typically use a calendar year, but may adopt a fiscal year aligned with business cycles or industry norms.
  • Entities taxed as partnerships or S corps must usually use the calendar year unless IRS approval is obtained.
  • Seasonal businesses and those with valid business reasons may request a non-calendar fiscal year using IRS Form 8716.
  • Fiscal years can be based on either month-ends or consistent weekday cycles, such as a 52–53-week year ending on a specific weekday.
  • Choosing the wrong fiscal year can result in misaligned cash flow tracking and increased tax complexity.
  • Changing your fiscal year later requires IRS approval and a strong justification.

The LLC fiscal year is the calendar year that limited liability companies choose as their tax year. Generally, most companies choose a fiscal year ending on December 31, which coincides with the taxable year for individual tax returns. However, some LLCs might choose a different fiscal year that better matches their revenue and expenses.

Determining Your Fiscal Year

When you form your LLC, you’ll have to think about the fiscal year you want to use. When determining this, you should consider profits and expenses in any given period to come up with an appropriate fiscal year that will be best for your LLC.

Note that the Internal Revenue Service (IRS) recognizes two types of taxable years:

  1. Calendar tax year, which is 12 consecutive months beginning on January 1 and ending on December 31
  2. Fiscal tax year, which is 12 consecutive months beginning on a date other than January 1 and ending on a date other than December 31

Depending on how your business is structured, you will be able to determine if you should use the calendar or fiscal tax year. Many small businesses use the calendar tax year as opposed to a fiscal year.

The fiscal year might also not end on the last day of the month, i.e., end of fiscal year being July 27. However, if you choose this option, the fiscal year will always end the same day of the week. For example, if you choose your fiscal year end as July 25, which is a Wednesday in that given year, your fiscal year end will be the last Wednesday of July every year thereafter.

What Is the Last Month of a Fiscal Year for an LLC?

The “last month of fiscal year LLC” is the final month in your 12-month accounting cycle. For example:

  • If you adopt a calendar year, December is the last month of your fiscal year.
  • If you choose a fiscal year that ends on June 30, then June is your last month.

LLCs can also operate under a 52–53-week year that ends on the same weekday of a particular month. For example, your LLC could have a fiscal year that ends on the last Friday in July annually. This can be especially useful in industries with weekly operational cycles, like retail or hospitality.

Choosing the right last month affects your year-end tax preparation, timing of deductions, and filing deadlines. IRS guidelines require consistency in fiscal year usage once established, unless you file a formal request (Form 8716) for a change.

Factors to Consider When Selecting a Fiscal Year

When deciding on the last month of fiscal year for your LLC, consider the following factors:

  • Business Seasonality: If your business earns most of its revenue in a specific season (e.g., winter resorts or summer camps), choose a fiscal year that ends right after the peak season. This allows accurate reflection of performance and helps in financial planning.
  • Industry Norms: Some industries tend to follow specific fiscal year-end dates (e.g., retail businesses often use a January 31 year-end to account for holiday sales returns).
  • Cash Flow and Budgeting: Choose a fiscal year that aligns with your natural financial cycle so expenses and revenues are easier to forecast and manage.
  • Administrative Simplicity: If you want your business taxes to align with your personal taxes (especially in a single-member LLC), selecting a calendar year ending on December 31 simplifies reporting.

LLC: An Overview

An LLC is a business structure that is created by state law. The owners are referred to as members; such members have great flexibility in how to manage the LLC. Since the LLC is not recognized by the federal government as an actual business classification for tax purposes, the LLC must choose how to be taxed.

When choosing how to be taxed, the LLC can choose to be taxed as one of the following:

  1. Partnership
  2. S Corporation
  3. C Corporation

LLC Taxed as a Partnership

If the LLC is taxed as a partnership, the taxable year will adhere to the member’s tax year, which is the calendar tax year. The reason for this is because the partnership and S corporation operate as pass-through tax entities, meaning that the owners/members report the profits and losses from the business on their personal income tax returns. Therefore, the business must follow an identical tax year as that of the individual tax year, which is the ordinary calendar tax year that ends on December 31.

LLC Taxed as an S Corporation

Similarly, the S corporation will also follow the calendar tax year. Keep in mind that the LLC, even if being treated as a partnership or S corporation for federal tax purposes, can request to operate with a fiscal year as opposed to a calendar tax year. However, they can only do so with the IRS’ prior approval.

LLC Taxed as a C Corporation

If the LLC is treated as a C corporation for federal tax purposes, the business has greater flexibility in how the tax year will be treated – whether it be a calendar or fiscal tax year.

Once you have chosen the calendar or fiscal tax year, you must abide by it in the following years. If you choose to change from one type of tax year to another, you will need prior approval from the IRS. The only exception to when a company can flip flop between the calendar and fiscal tax year is if the business is a seasonal business, operating only during certain times of the year. Regardless, the business must still formally request such change and receive approval from the IRS prior to making any changes. The primary purpose for obtaining IRS pre-approval is to reduce any lost or altered revenues that result from the change in the tax year treatment.

Fiscal Year Options by Tax Classification

The last month of fiscal year for an LLC can differ depending on its federal tax classification:

  • Single-Member LLC (Disregarded Entity): Typically follows the calendar year (December is the last month).
  • LLC Taxed as a Partnership: Usually must adopt a calendar year unless 100% of members use a different year or special IRS rules allow an exception.
  • LLC Taxed as an S Corporation: Must usually use the calendar year, though exceptions apply with IRS approval.
  • LLC Taxed as a C Corporation: Has the most flexibility and may choose any month as the fiscal year-end without prior IRS approval.

If an LLC wants to change its tax year, it must file IRS Form 1128 and demonstrate a compelling business reason.

Useful Information

You can use the following information that can be found on the IRS website if you want additional specifics regarding the LLC fiscal year:

  1. General information on taxing of LLCs (Publication 3402)
  2. Information on the two types of tax years (Publication 583)
  3. Request to elect a different tax year (Form 8716)

Changing Your LLC’s Fiscal Year

Once your LLC has adopted a fiscal year, changing it is not simple. You must:

  • File IRS Form 1128 (Application to Adopt, Change, or Retain a Tax Year)
  • Show a substantial business purpose for the change
  • Get prior approval before implementation

Common reasons for requesting a change include seasonal income patterns, alignment with a parent company’s fiscal year, or aligning with industry standards. IRS scrutiny ensures businesses don’t manipulate tax liabilities by changing fiscal year-ends frequently.

For seasonal LLCs, especially those with fluctuating cash flow, a fiscal year ending just after peak business months can provide a clearer picture of profitability and support better planning for the year ahead.

Frequently Asked Questions

  1. What is the last month of fiscal year for an LLC using the calendar year?
    December is the last month of the fiscal year if the LLC follows a calendar year.
  2. Can an LLC choose a different fiscal year?
    Yes, but LLCs taxed as partnerships or S corporations need IRS approval to adopt a non-calendar fiscal year.
  3. Why would an LLC choose a fiscal year that doesn’t end in December?
    Reasons include seasonal income cycles, industry norms, or alignment with a parent company’s accounting period.
  4. What IRS form is needed to change an LLC’s fiscal year?
    Use IRS Form 1128 to request a change, and include a valid business reason.
  5. Can the fiscal year end on a weekday instead of a calendar date?
    Yes, some LLCs use a 52–53-week fiscal year that ends on a consistent weekday, like the last Friday of a specific month.

If you need help learning more about the LLC fiscal year, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law, and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.