Fiscal year definition

A fiscal year is an accounting period businesses, governments, and other organizations use to track and report on their financial performance. Fiscal years can begin at any point in a calendar year and are typically 12 months long. A fiscal year allows an entity to accommodate seasonal demands and lends flexibility to the financial reporting process.

Organizations may choose a fiscal year that is different from a calendar year because some industries, like retailers, for example, have clear busy and slow seasons. Aligning the fiscal year to end right after the busy season makes it easier to measure performance and forecast for the year ahead. Likewise, agricultural businesses often start their fiscal year after harvest to match revenue recognition with the production cycle.

Companies often match their fiscal year with others in the same industry so that investors, analysts, and regulators can compare performance more easily. Many tech companies use a July-to-June fiscal year to align with budgeting and product release cycles common in the sector.

What is the difference between a calendar year and a fiscal year?

While a calendar year starts in January and ends in December, a fiscal year might begin at another time. For example, Microsoft’s fiscal year runs from July 1 to June 30. Other organizations might choose a fiscal year that runs from July 1 to June 30, or another 12-month period that suits their operations.

Fiscal year for government

The fiscal year for the United States government begins in October and ends in September of the following year. State and local governments often follow a similar fiscal year calendar, but some do not.

How long is a fiscal year?

A standard fiscal year spans 12 consecutive months or 52 to 53 weeks. However, if a business starts mid-year or changes its accounting cycle, its fiscal year may be shorter or adjusted accordingly. Also, if a business changes its accounting period, that may affect the length of its fiscal year.