When Does a Fiscal Year End? An Accounting Overview

A fiscal year is a 12-month accounting period organizations use for financial reporting, budgeting, and tax purposes. It does not always align with the standard calendar year, which runs from January 1 to December 31. This period tracks and evaluates a business’s financial performance.

Understanding the Fiscal Year

Unlike the fixed January 1 to December 31 timeline of a calendar year, a fiscal year offers flexibility in its start and end dates. While many businesses use the calendar year, a fiscal year can begin in any month and continue for 12 consecutive months. For example, a fiscal year might run from July 1 to June 30 of the following year, or from October 1 to September 30.

Organizations often choose a non-calendar fiscal year to align financial reporting with their natural business cycles. A retail company, for instance, might conclude its fiscal year on January 31 to capture the busy holiday shopping season within a single reporting period. This provides a more accurate picture of annual performance by including all related revenues and expenses in the same accounting period.

Determining the Fiscal Year End

Businesses generally have flexibility to select any month-end for their fiscal year, often based on operational cycles. For example, some retailers choose a January 31 or February 28/29 year-end to account for post-holiday sales and returns. This choice is typically made when the business is formed and must be consistently applied in subsequent years for clear financial comparisons.

Government entities, including the U.S. federal government, frequently operate on fiscal years that do not coincide with the calendar year. The U.S. federal government’s fiscal year begins on October 1 and concludes on September 30. Many state and local governments also have distinct fiscal year ends, with some concluding their financial period on June 30.

Non-profit organizations also establish a fiscal year end, often coordinating it with grant cycles or major program periods. This allows them to match grant revenue with associated expenses within the same reporting period. Additionally, some businesses may adopt a 52/53-week fiscal year, ending on the same day of the week nearest a specific month-end, such as the last Saturday in December. This approach ensures consistent weekly reporting periods, with the year varying between 52 and 53 weeks.

Importance of the Fiscal Year End

The fiscal year end date marks the completion of the annual accounting cycle, at which point financial statements are prepared. These statements, including the income statement, balance sheet, and cash flow statement, provide a comprehensive overview of the organization’s financial standing and performance for that period.

For tax purposes, the fiscal year end dictates the reporting period for tax filings. Businesses operating on a fiscal year must file income tax returns by the 15th day of the fourth month after their fiscal year concludes.

The fiscal year serves as the foundation for annual budgeting and planning processes. Organizations use this period to set financial goals, allocate resources, and evaluate performance against established targets. This approach supports strategic decision-making and effective resource management.