Your LLC’s fiscal year sets the 12-month period you use for bookkeeping and tax filing. Most LLCs default to the calendar year, but the right choice depends on how your business is taxed and, in some cases, on IRS approval. Here’s how the LLC fiscal year works for each entity type, plus how to figure out which one applies to you.
Calendar Year vs. Fiscal Year for an LLC
A calendar tax year runs January 1 to December 31. A fiscal tax year is any 12 consecutive months ending on the last day of a month other than December, or a 52-53 week period that ends on the same weekday each year, per the IRS’s definitions in Publication 538. The last month of your fiscal year is whatever month you choose as your year-end, as long as it isn’t December and your LLC is allowed to use it.
| LLC Type | Default Tax Year | Can You Use a Fiscal Year? | What’s Required |
|---|---|---|---|
| Single-member LLC (disregarded entity) | Generally the owner’s tax year (calendar year for most individuals) | Rarely; generally only if the owner’s tax year changes | A change in tax year generally requires IRS approval via Form 1128 |
| Multi-member LLC (partnership) | Generally the tax year of the majority-interest partners (commonly calendar year, since most individual partners file on a calendar year) | Yes, in limited cases | IRS rules look to majority interest, principal partners, or least aggregate deferral of income, per Publication 538; a business-purpose year generally requires Form 1128, and a Section 444 election uses Form 8716 |
| LLC taxed as S corp | Calendar year | Yes, two distinct paths | Either demonstrate a business purpose and get IRS approval via Form 1128, or make a Section 444 election via Form 8716, which does not require a business purpose but limits the year-end to September, October, or November and requires a required payment under section 7519 |
| LLC taxed as C corp | Generally chosen with the first tax return | Yes | Generally adopted on the first return and used consistently once adopted; later changes generally require Form 1128 |
When Should My LLC Fiscal Year End?
The best fiscal tax year end date for an LLC usually lines up with the natural end of your business cycle. A retailer with a heavy holiday season might end its fiscal year in January or February, once the holiday returns and inventory counts are settled, rather than cutting off the tax year mid-rush on December 31. A landscaping company might pick a fiscal year end after the fall cleanup season instead.
If your LLC doesn’t have a clear seasonal pattern, the calendar year is usually the simpler option: it matches most owners’ individual tax years and requires no extra IRS filing. Once a tax year is adopted, changing it generally requires IRS approval and a valid business reason (or a Section 444 election, where available), so it’s worth thinking through your revenue cycle before you commit.
How Do I Know My LLC Fiscal Year?
Check whichever of these applies to your LLC:
- Single-member LLC: If your LLC is taxed as a disregarded entity, its tax year generally follows your personal tax year, which is the calendar year for most individuals, unless you’ve filed to change it.
- Multi-member LLC: Per IRS Publication 538, the tax year for an LLC taxed as a partnership generally follows the tax year of the partners who hold the majority interest (more than 50% of profits and capital). If no majority exists, the IRS looks to the tax year of the LLC’s principal partners (those with a 5% or greater interest), then to whichever year produces the least aggregate deferral of partner income.
- LLC taxed as an S corp or C corp: Check your entity classification election (Form 8832, or Form 2553 for S corp status) and any tax year election filed with the IRS (Form 8716 for a Section 444 election, or Form 1128 for a business-purpose fiscal year). Your tax year is generally set at that point and carries forward each year.
If you’re not sure which category applies, or you inherited an LLC’s books from a previous accountant, your past tax returns will show the tax year end date the LLC has been filing under. That’s generally the date to keep using unless you formally request a change.
Changing Your LLC’s Fiscal Year
Once your LLC has been formed and you have established the tax year, changing it generally requires advance IRS approval; you can’t switch retroactively. File Form 1128, Application to Adopt, Change, or Retain a Tax Year, and include a valid business reason for the change, such as aligning with a new seasonal cycle. Some changes qualify for automatic approval procedures, though a filing is generally still required. The IRS reviews these requests to prevent tax years from being changed in a way that distorts or defers reported income.
Because tax year rules depend on how your LLC is taxed, it’s a good idea to review any change with a CPA or tax professional before filing.
FAQ
Only in certain cases. Single-member LLCs generally follow the owner’s tax year, and multi-member LLCs generally follow the majority-interest partners’ year, so a different year-end usually requires IRS approval or an election. LLCs taxed as C corps have more flexibility to select a fiscal year from the start.
Without an election, your LLC generally uses the calendar year by default (or, for multi-member LLCs, whichever year the majority-interest, principal-partner, or least-aggregate-deferral rules produce).
It can. S corps are generally required to use a calendar year, per IRS Publication 538, so if your LLC previously ran on a fiscal year, you may need to switch to December 31 as your year-end when the S corp election takes effect. You can generally keep a different year-end only by establishing a business purpose through Form 1128, or by making a Section 444 election on Form 8716 (limited to a September, October, or November year-end, with a required payment).
It can. With pass-through taxation, LLC income generally flows to the owners’ personal returns, so the LLC’s tax year determines which personal tax year that income is reported in. A CPA can help you understand the timing for your situation.
Not exactly. A tax year is the annual period the IRS uses for your return, and it can be either a calendar year or a fiscal year. A fiscal year is one type of tax year that ends in a month other than December.