Fiscal year

A fiscal year or financial year is a 12-month period used for calculating annual ("yearly") financial reports in businesses and other organizations. In many jurisdictions, regulatory laws regarding accounting require such reports once per twelve months, but do not require that the twelve months constitute a calendar year (i.e. January to December). However, a new company or business has to decide at the beginning on which month their fiscal year will start, and then (generally) stay with it.

Related Topics:
Month - Financial reports - Businesses - Law - Accounting - Calendar year

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Such fiscal years are typically numbered using a calendar year and quarter thereof. A fiscal year quarter is 3 months (1/4 of a year) long. For example, the United States Government fiscal year for 2006 is as follows:

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• 1st Quarter: October 2005 - December 2005
• 2nd Quarter: January 2006 - March 2006
• 3rd Quarter: April 2006 - June 2006
• 4th Quarter: July 2006 - September 2006

So the US Government's fiscal year begins on October 1 of the previous calendar year and ends on September 30 of the year with which it is numbered.

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In the United Kingdom, the government's financial year runs from April 1 to March 31, and corporation tax is charged by reference to that period. However, the personal tax year (which governs liability to income tax and capital gains tax) runs from April 6 to April 5. This reflects the old ecclesiastical calendar, with New Year falling on March 25 (Lady Day), the difference between April 6 and March 25 being accounted for by the eleven days "missed out" when Great Britain converted from the Julian Calendar to the Gregorian Calendar in 1752 (the British tax authorities were unwilling to lose 11 days of tax revenue, so the 1752/3 tax year was extended by 11 days).

Related Topics:
United Kingdom - April 1 - March 31 - Corporation tax - Income tax - Capital gains tax - April 6 - April 5 - Ecclesiastical calendar - New Year - March 25 - Lady Day - Julian Calendar - Gregorian Calendar - 1752

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Companies that are units within a "group" of businesses must all use nearly the same fiscal year (differences of up to three months are permitted in most jurisdictions, such as the U.S. and Japan), with consolidating entries to adjust for transactions between units with different fiscal years, so the same resources will not be counted more than once or not at all.

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