A fiscal year is defined as the 12-month period for which an association budgets and uses its funds, reports income taxes and generates a financial statement for its members. The 12-month period can have any start date...January 1, March 15, May 10, etc. If the fiscal year starts on January 1 and ends on December 31 is known as a calendar year. The reference year is the year which the budget ends. If an association's fiscal year starts on July 1, 2015 and ends on June 30, 2016, it's known as the 2016 budget or 2016 fiscal year. Some will refer to it as the 2015-2016 budget cycle or fiscal year.
Changing Fiscal Year. Most associations have a calendar year and prefer it that way. Some with a mid-year start date may find it confusing and want to change to a calendar year. If an association's governing documents do not define its fiscal year, a board can change the start date of its fiscal year by giving appropriate notices to the Secretary of State, IRS, Franchise Tax Board, and membership. If the period has been set in its governing documents, the documents must be amended.
Recommendation: Boards should seek assistance from their association's CPA before making the change.
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