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Calendar Year vs. Fiscal Year: Did You Choose the Right One for Your Business?

Calendar Year vs. Fiscal Year: Did You Choose the Right One for Your Business?

When you started your construction company…
Did you intentionally choose your tax year?

Or did it just default to calendar year?

Most contractors don’t realize this is even a decision.

Here’s the reality:

• Sole props, partnerships, and S-Corps usually must use calendar year
• Payroll is ALWAYS reported calendar year
• Changing your tax year requires IRS approval
• Short tax years (when you start mid-year) can impact depreciation and deductions

If you launched mid-year and bought equipment, your first-year write-offs may not look the way you expected.

And once you choose an accounting period?
It’s not easy to change.

For 95% of small construction businesses, calendar year + cash basis makes sense.

But the key is understanding what you’re on — and why.

If you don’t know whether you’re cash or accrual… that’s a bigger issue.