Fiscal year is a 12-month period for which a business or government reports its financial statements.
Most governments have laws that require businesses to prepare tax returns and financial statements for a one-year period. However, some governments may be flexible about when the year must begin. This arrangement allows businesses to choose a reporting time that is convenient for them. For example, the busiest time of the year for retail stores is often in December. Financial statements for a fiscal year for such businesses have certain requirements. The businesses must inventory (count) all of their stock and close the books (balance money paid out with money received). Taking these steps while coping with holiday sales would create a serious strain on a business. As a result, many businesses choose a fiscal year that does not begin on January 1 and end on December 31. Instead, a business may choose, for example, to begin its fiscal year on April 1 and end it on March 31 in the following calendar year.
Many governments operate on a fiscal year for budgets and accounting. The start and end of a government’s fiscal year is set by law.
See also National budget .
