A fiscal year, often abbreviated as “FY,” is a 12-month period that a company or organisation uses for financial reporting and planning purposes. Unlike the calendar year, which begins on January 1st and ends on December 31st, a fiscal year can start on any date and end 12 months later. The choice of when the fiscal year starts and ends is typically based on the company’s operational and reporting needs.
A company’s fiscal year may align with the calendar year, running from January 1st to December 31st. However, many companies choose different fiscal year start dates, such as April 1st to March 31st or July 1st to June 30th. Government entities, nonprofits, and businesses in various industries might opt for fiscal years that correspond to their specific business cycles.
The use of a fiscal year allows organisations to track financial performance, create budgets, and report results without being confined to the calendar year. This can be especially important for businesses that experience seasonal fluctuations in their operations or for those whose accounting needs differ from traditional calendar periods.
In summary, a fiscal year is a 12-month period chosen by a company or organisation for financial reporting and planning, providing flexibility to align with their operational patterns and financial requirements.