What is a fiscal year?
A fiscal year has more to do with accounting than the calendar. Also known as the “financial year” or the “budget year,” it spans whatever 12-month period its creator happens to decide upon. The U.S. government, for example, observes its fiscal year from 1 October through 30 September. In the United Kingdom, it goes from 6 April to 5 April of the following year. If you’re trying to establish a fiscal year period for a new business, the type of enterprise has to be of primary consideration. A hair salon or a auto repair shop, where work tends to be steady and not seasonable, would do just as well to use the regular calendar year, which corresponds with the federal tax year. If you’re operating a retail operation that you hope will reach peak traffic at Christmas time, the last thing you would want to do is have the end of your fiscal year — with the resulting scramble to accumulate tax information and prepare a budget for the upcoming year — coincide with the Christmas rush. That is,
The accounting year for a company is usually referred to as a fiscal year. The fiscal year for different companies may vary, which means that some of them may not use a calendar year as their fiscal year. However, most companies prefer to use a calendar year for their accounting activities. Financial operations of the U.S. Government are carried out in a 12-month fiscal year. Thus, the federal government fiscal year runs from Oct. 1 of the prior year through Sept. 30 of the next year.
