What Is a Calendar Year?

A calendar year is ♔a one-year period that begins on Jan🐽uary 1 and ends on December 31, based on the commonly-used Gregorian calendar.

For individual and corporate taxation purposes, the calendar year commonly coincides with the fiscal year and thus generally comprises all of the year's financial information used to calculate 澳洲幸运5官方开奖结果体彩网:income tax payable.

Understanding a Calendar Year

The calendar year is also called the civil year and contains a full 365 days or 366 for a leap year. It is divided up into months, weeks, and days. The Gregorian calendar is the international standard and is used in most parts of the world to organize religious, social, business, personal, and administrative events.

Calendars are useful for individuals and corporations to manage their schedules, plan events and activities, and mark special occasions in the future. The advent of technology has made planning even easier, as calendars are now easily accessible through computers, 澳洲幸运5官方开奖结果体彩网:smartphones, and other personal devices.

Some parts of the world use the stand🅺ard as well as religious calendars. For example, the Gregorian calendar was adopted in India nationwide when the British colonized the country. Althoug🌼h most of urban India continues to use it today, devout Hindus in more rural parts of the country may continue to use a different regional, religious calendar, where the beginning and end of year dates differ.

A calendar year for individuals and many companies is used as the fiscal year, or the one-year period on which their payable taxes are calculated. Some companies choose to report their taxes based on a fiscal year. In most cases, this period starts on April 1 and ends on March 31, and better conforms to 澳洲幸运5官方开奖结果体彩网:seasonality patterns or♋ other accounting concerns applicable to their businesse☂s.

Calendar Year vs. Fiscal Year

A calendar year always runs from January 1 to December 31. A fiscal year, by contrast, can start and end at any point during the year, as long as it comprises a full 12 months. A company that starts its fiscal year on January 1 and ends it on December 31 operates on a calendar year basis. The calendar year represents the most common fiscal year in the business world.

Large companies, including Google's parent company Alphabet, Amazon, and Meta (formerly Facebook) use the calendar year as their fiscal year. Other companies elect to maintain a fiscal year. Walmart and Target, for example, have fiscal years that do not coincide with the calendar year.

Switching From a Calendar to a Fiscal Year

Individuals who file using the calendar year must continue to do so even if they begin operating a business, sole proprietorship, or become an 澳洲幸运5官方开奖结果体彩网:S corporation shareholder.

You must first obtain approval from the 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS) by filing if you want ♉to switch from the calendar year reporting to fiscal year reporꦏting for your tax filings.

Generally, those who follow the calendar year for tax filings include anyone who has no annual accounting period, has no books or records, and whose current tax year does not qualify as a fiscal year.

Advantages and Disadvantages of a Calendar Year

Perhaps the biggest advantage of using the calendar year is simplicity. For sole proprietors and small businesses, tax reporting is often easier when the business's tax year matches up with that of the business owner. Moreover, while any 澳洲幸运5官方开奖结果体彩网:sole proprietor or bus♋iness may adopt the calendar year as its fiscal year, the IRS imposes specific requirements on those businesses wanting to use a different fiscal year.

One of those requirements is when tax filings are due. The IRS requires businesses to file their taxes on the 15th day of the third month after the end of their fiscal year. So if a company's fiscal year ends on June 30, the business must file its taxes by September 15.

In certain industries, using a different fiscal year makes sense. For example, seasonal businesses that derive the majority of thei൩r revenue during a certain time of the year often choose a fiscal year that best matches revenue to expenses.

Retailers such as Walmart and Target use a fiscal year that ends on January 31 rather than Decem🐎ber 31 because December is their busiest month due to the holiday seasonꦫ, and they prefer to wait until the holiday season ends to close out their year-end books.

Businesses that solicit investment dollars—whether from 澳洲幸运5官方开奖结果体彩网:venture capital or 澳洲幸运5官方开奖结果体彩网:crowdfunding platforms—may find it advantageous to use a fiscal year. For example, if a business receives a big investment in November or December, but does not begin incurring major expenses until February or March, using a calendar year could result ๊in an onerous tax burden.