When Are the Yearly Quarters for a Business?

A “quarter” in the context of a year refers to one of four equal divisions of a 12-month period. This segmentation helps organize time for various purposes, from general planning to specific financial and reporting needs. Understanding how a year is divided into quarters is helpful for both personal and business contexts.

Calendar Year Quarters

The calendar year is divided into four distinct quarters, each spanning three months. The first quarter, known as Q1, begins on January 1 and concludes on March 31.

The second quarter, Q2, runs from April 1 through June 30. The third quarter, or Q3, covers July 1 to September 30. The fourth quarter, Q4, starts on October 1 and ends on December 31. These fixed dates are universally recognized and are commonly used for general timelines, personal budgeting, and basic reporting.

Understanding Fiscal Quarters

While calendar quarters follow a fixed January to December schedule, fiscal quarters are flexible and are determined by a business’s chosen fiscal year start date. A fiscal year is any consecutive 12-month period a business uses for its financial accounting and reporting. For example, if a company’s fiscal year begins on July 1, its first fiscal quarter (Q1) would run from July 1 to September 30.

Consequently, its Q2 would be October 1 to December 31, Q3 from January 1 to March 31, and Q4 from April 1 to June 30. Businesses often select a fiscal year that aligns with their natural business cycles, such as after a major sales season, rather than the calendar year. This allows for cleaner financial reporting, budgeting, and tax planning. Sole proprietorships and single-member LLCs are typically required by the IRS to use the calendar year for tax purposes unless specific conditions are met.

Importance of Quarters

Dividing a year into quarters is important across various sectors. For businesses, quarters provide structured periods for tracking performance and financial health throughout the year. Publicly traded companies, for instance, are required to file quarterly financial statements, such as Form 10-Q with the Securities and Exchange Commission (SEC), providing investors with updates on revenue, expenses, and profitability.

This quarterly reporting allows for timely adjustments to business strategies, resource allocation, and identification of trends. It also enables businesses to comply with regulatory and tax obligations, such as estimated tax payments for certain taxpayers. Understanding these quarterly divisions supports informed decision-making for both businesses and individuals, aiding in financial management and planning.