Definition of Fiscal Year
A fiscal year is an accounting year that does not end on December 31. (Accounting years of January 1 through December 31 are known as calendar years.)
A fiscal year could be a 12-month period of time or a 52/53-week period of time.
One reason a U.S. business or other organization will have its accounting year end on a date other than December 31 is to coincide with its natural business year.
When an organization’s fiscal year ends outside of the CPAs’ busy season, the organization may be able to negotiate a lower auditing fee.
Examples of Fiscal Years
A few examples of fiscal years include:
- 12 months of February 1 through January 31
- 12 months of October 1 through September 30
- 12 months of June 1 through May 31
- 52 weeks ending on the Saturday closest to January 31. (Since 52 weeks X 7 days = 364 days vs. 365 days per year, there will be an occasional 53-week year)
School districts typically have fiscal years of July 1 through June 30 to coincide with its natural business year. Large retailers often end their fiscal years on the Saturday closest to January 31 in order to include sales returns from its peak December sales. The retailers’ interim periods will be 13-week “quarters” consisting of one 5-week “month” plus two 4-week “months”. This allows for better comparisons between years.
