Selection of Corporate Tax Year Resolution

By David Gass

Holding corporate meetings and keeping up with resolutions is fundamental to why you formed a corporation. Appropriate, timely corporate resolutions help protect the personal assets of owners and officers.

Writing corporate resolutions should be simple and contain language adequate enough to show that the board of directors exercised its legal duty of care and loyalty. Resolutions should reflect meetings or written consents soon after the agreed upon actions happen.

A company's tax year end must correspond with its annual accounting period, which is defined as the period on the basis of which a taxpayer regularly computes its income in keeping its books. All changes in a company's year-end must occur strictly for a business purpose.

Certain companies are required to adopt a particular year-end. For example, taxpayers who become part of a group which files a consolidated return must adopt the taxable year of the parent corporation. Thus, a company which has been recently acquired by or merged with another may be required to change its year-end.

Before a corporation’s initial tax returns have been filed with the IRS, a corporation may change its fiscal year as many times as they choose. For example, even if the Board of Directors has chosen a specific fiscal year end date, the Board of Directors can change this date at any time by properly conducting a Meeting of the Board of Directors and by passing a resolution to change its fiscal year end date.

Companies which elect to be treated under the provisions of subchapter S of the Internal Revenue Code generally must adopt a calendar year end. Personal service corporations are also normally required to utilize a calendar year-end.

Corporate Resolutions maintained properly are vital to the continued success and existence of a corporation. They are the unfailing protection of the company directors and shareholders.

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