Due to their adaptability, simplicity, and protection of personal assets, limited liability companies (LLCs) are a common type of business structure in the United States. However, LLCs must have a fiscal year end for accounting and tax purposes just like any other type of business. The conclusion of a company’s financial year and the closing of its accounts for the year are known as a fiscal year-end. The operating agreement for the LLC often specifies this date in advance and allows for changes as needed.
It is conceivable to change the fiscal year end of an LLC, but doing so calls for careful planning, open communication, and compliance with IRS regulations. Although the IRS permits LLCs to alter their fiscal year-end, there are limitations on how frequently this can be done. Once every five years, an LLC may change its fiscal year-end without obtaining IRS consent. However, an LLC must receive authorization from the IRS if it wishes to change its fiscal year-end more than once every five years.
An LLC must submit Form 1128, Application to Adopt, Change, or Retain a Tax Year, to the IRS in order to alter the end of its fiscal year. Before the end of the current fiscal year, the form must be submitted, and it must include a thorough justification for the LLC’s desire to alter its fiscal year-end. After reviewing the application, the IRS will decide whether to grant or deny the request. If the request is granted, the LLC will be required to file taxes beginning with the next tax year using the new fiscal year-end.
It’s also crucial to remember that altering a fiscal year’s conclusion could have an effect on the LLC’s financial reports and tax obligations. For example, if an LLC switches its fiscal year-end from December 31 to June 30, it must record six months’ worth of earnings and expenses in the current tax year. A more difficult tax return and a greater tax bill may come from this. Therefore, before changing its fiscal year-end, an LLC should speak with a tax expert.
If you are a shareholder, investor, or creditor of a company, you might need to know the financial year-end in order to make wise choices regarding the firm’s performance and financial health. The annual report that publicly traded corporations are required to publish with the Securities and Exchange Commission (SEC) contains information about the financial year-end of the company. The income statement, balance sheet, cash flow statement, and footnotes are just a few of the financial performance statistics that are included in the annual report.
If the business is not publicly traded, its tax returns, which are private records submitted with the IRS, will contain information about its fiscal year-end. Tax returns, however, are not made available to the general public, therefore you will need to ask the business directly for this information. To access this information, you can also get in touch with the company’s bookkeeper or accountant.
In conclusion, an LLC may change its fiscal year-end, but it must do it in accordance with the IRS’s guidelines and after consulting with a tax expert. Depending on whether a firm is publicly traded or not, you can find information about its financial year-end in either its annual report or tax returns. Making judgments concerning a company’s financial performance and year-end needs to be done with knowledge of its financial year-end.