A fiscal year is 12 consecutive months ending on the last day of any month except December. A tax year is a fiscal year that varies from 52 to 53 weeks. If you adopt a fiscal year, you must maintain your books and records and report your income and expenses using the same tax year. If you operate a business as a sole proprietor, the tax year for your business must be the same as your individual tax year. All businesses except partnerships must file an annual income tax return.
Partnerships file an information return.
The form you use depends on how your business is organized. Your payments of self-employment tax contribute to your coverage under the Social Security system. Wages and salaries received for services performed as an employee and covered by Social Security or railroad retirement, however, are not self-employment income. Nor are tips received for similar services as an employee. See Publication 533, Self-Employment Tax, for more information.