What Is Fiscal Year-End?
Let me explain fiscal year-end to you directly: it's the last day of a government's or business's 12-month accounting period. This might not match the calendar year, which ends on December 31, and it typically wraps up at the end of a month.
You see, companies, organizations, and governments pick their fiscal year-end to line up with their revenue cycles, budgeting needs, and overall strategies.
Key Takeaways
- Fiscal year-end is the last day of a 12-month accounting period, used for financial planning and tax reporting.
- If a company's fiscal year-end matches the calendar year-end, it ends on December 31.
- Companies select the fiscal year-end that best fits their needs.
- Those with fiscal years different from the calendar year might have unique tax reporting and payment dates.
Understanding Fiscal Year-End
A fiscal year is simply an entity's one-year accounting period, and it often doesn't align with the calendar year from January 1 to December 31.
As a business, you can choose your fiscal year's start and end dates. Usually, you'll pick an end date that works best for budgeting, planning, and reporting in your industry. For instance, if you're a retailer, you might end your fiscal year at the end of January to capture holiday shopping and close on a strong note.
This fiscal year-end also signals the close of your accounting and reporting period. You'll generate financial reports for internal use, investors, external observers, and taxes. Take a public company ending March 31: its 10-K covers from March 31 of the prior year to the current one. These statements come out after the fiscal year-end.
Governments set their fiscal year-ends to match tax collection and budgeting timelines. Remember, if you're a fiscal-year taxpayer, you generally file by the 15th day of the fourth month after your fiscal year ends.
Fiscal Year-End Examples
Publicly traded companies have varied fiscal year-end dates. Apple, for example, ends its fiscal year on the last Saturday in September. Microsoft wraps up on the last day of June, and Walmart finishes at the end of January.
When you're comparing companies with different fiscal years, make sure the data covers the same timeframe to avoid skewed analysis.
Fiscal Year-End vs. Calendar Year-End
If your fiscal year-end is the same as the calendar year-end, it means December 31 is your cutoff. But you can choose a fiscal year-end that better suits your operations, especially if your business cycle or suppliers don't follow the calendar year.
Retailers often shift away from the calendar year due to holiday sales peaks. Ending on December 31 could be tough with resources tied up in sales, so they might pick January 31 instead. A luxury resort could end on September 30, right after vacation season, for better earnings reporting.
Once you decide on a fiscal year-end during incorporation, changing it requires IRS approval.
Tax Deadlines
In the U.S. and elsewhere, the tax year usually follows the calendar year, with reporting in April. But if your fiscal year differs, your filing and payment dates adjust.
The IRS allows non-calendar fiscal years to serve as tax years, with filing due on the 15th day of the fourth month after the end. Exceptions apply to S corporations or those ending June 30, which file by the 15th day of the third month post-year-end.
What Is the U.S. Fiscal Year-End?
The U.S. government's fiscal year runs from October 1 to September 30, distinct from the calendar year.
What Happens at the End of a Fiscal Year?
At fiscal year-end, you review all annual bookkeeping: reconcile transactions, make adjustments, verify data, and calculate income, expenses, revenue, investments, and more.
How Do Companies Choose Their Fiscal Year End?
Most companies base their fiscal year-end on business seasonality. Some are steady year-round, others peak at certain times. You'll likely choose the end right after your highest profit period, like post-Christmas for holiday-dependent businesses.
The Bottom Line
Governments, companies, and organizations use a 12-month accounting period for financial and tax reporting, with the fiscal year-end marking its close. This can differ from the December 31 calendar year-end and is selected based on business needs and seasonality when incorporating.
Other articles for you
The real interest rate adjusts the nominal rate for inflation to show the true cost or yield of borrowing and investing.
An ECN broker provides direct market access via electronic networks for tighter spreads and transparency in trading equities and currencies.
A shell corporation is an inactive business entity often used for legitimate purposes like fundraising or tax benefits but sometimes abused for illicit activities.
The Plunge Protection Team is a government advisory group on financial markets, often suspected of secretly intervening to stabilize stock prices.
Asymmetric information occurs when one party in a transaction has more knowledge than the other, often benefiting sellers but sometimes leading to inefficiencies or fraud.
The Wharton School is a top-ranked business school at the University of Pennsylvania, renowned for its finance programs and global prestige.
An N.V
Depreciation is an accounting method that spreads the cost of tangible assets over their useful life to match expenses with revenue.
A tontine is an investment scheme where participants pool money for dividends that increase as members die, benefiting survivors until the last one.
Without recourse refers to financial agreements where one party assumes the risk of default without the ability to seek reimbursement from another party.