Fiscal Year (FY)Here are the Most important Dates & Days of a Fiscal Year
We all know that one year consists of 12 months, or 52 weeks.
A fiscal year is just that, a one-year period that companies and governments use for budgeting and financial reporting.
While most of us know the standard year begins on January 1st and ends on December 31, fiscal years don’t necessarily need to correspond with the standard calendar year.
Let’s learn more and understand why some companies choose to operate under a fiscal year rather than a standard calendar year.
What is a Fiscal Year?
Fiscal years are commonly used for accounting purposes and more specifically, in the preparation of financial statements.
The IRS allows taxpayers to choose if they want to operate on a calendar year (January 1st – December 31st) or on a fiscal year.
A fiscal year is a 12 month period (52 weeks) chosen by a company to report its financial information.
All of the company’s financial reports, federal tax filings, external audits, and budgets are going to be based on the company’s fiscal year.
A fiscal year must be a period lasting one year but it does not have to start at the beginning of the calendar year.
The fiscal year can be chosen based on the revenue cycle and nature of the business.
To help us understand this a little bit better, let’s look at the standard calendar year and fiscal calendar year by quarter.
Fiscal Quarter Dates
Calendar quarter dates simply correspond to the standard calendar year of January 1st – December 31st as follows:
- Q1 First Quarter: January 1st – March 31st
- Q2 Second Quarter: April 1st – June 30th
- Q3 Thirst Quarter: July 1st – September 30th
- Q4 Fourth Quarter: October 1st – December 31st
This standard calendar year starts on January 1st and ends on December 31st.
Fiscal quarter dates align with a companies fiscal year and they may or may not align with the standard calendar quarter dates listed above.
These would be called non-standard fiscal quarters or a non-standard fiscal year.
Non-Standard Fiscal Quarters
When a companies fiscal calendar does not align with the standard calendar quarter dates, these are called non-standard fiscal quarters.
Non-standard fiscal quarters are more commonly seen in companies who have uneven revenue streams.
For example, a holiday decor shop may generate most of its revenue during the holiday months of Q4.
To use a real world example, let’s look at Apple’s fiscal quarters:
- Q1 – October, November, December
- Q2 – January, February, March
- Q3 – April, May, June
- Q4 – July, August, September
Because Apple’s revenue is highly seasonal, they have a non-standard fiscal quarter setup.
Their Fiscal year begins on October 1st and ends on September 30th.
The United Stated Federal government’s fiscal year also runs from October 1st – September 30th and most non-profits have a fiscal year that runs from July 1st – June 30th and this fiscal year is often chosen to align with the timing of grant awards.
According the to IRS, a fiscal year is 12 consecutive months ending on the last day of any month except December.
IRS Tax Deadline Requirements for Fiscal Years
By default, the IRS system goes by the standard calendar year and most taxpayers are required to file their taxes by April 15th the following year.
Fiscal tax payers on the other hand must make some adjustments to their filing deadlines.
Fiscal tax payers must file by the 15th day of the 4th month following the end of their fiscal year.
So if Apple observes a fiscal year of October 1st – September 30th, they must submit their tax return by February 15th (the 15th day of the 4th month following the end of their fiscal year).
For eligible businesses in the United States, a fiscal year is adopt by simply submitting their first income tax return observing the fiscal calendar year they have chosen to follow.
Furthermore, businesses that start on a fiscal calendar year can change their elect to change their calendar year while companies that begin on a standard calendar year must request permission from the IRS to change to a fiscal calendar year.
Form 1128 is the Application to Adopt, Change, or Retain a Tax year form and it details the requirements to do so.
Importance of Fiscal Years
Publicly traded companies are required to release financial statements for each quarter.
In the United States, these reports are called 10-Q reports and are filed with the Securities and Exchange Commission.
Not only are these reports used for tax purposes, but they are also used by investors, shareholders, and outside parties to analyze the companies performance throughout each period.
Quarterly reports are important for the following reasons:
The public can see the true financial status of a company.
Companies are held responsible for their financials and performance because their financial statements are filed through the SEC and made public.
- Valuation and Analysis and Comparison
potential investors can valuate and analyze a company by reviewing their quarterly reports.
Because companies can operate on different calendar quarter dates, these reports provide some consistency when looking at a company overall.
Private companies are not required to release their financial statements.
If you are not sure where to find a companies fiscal calendar year, you can look on the companies 10-K report.
A 1o-K report is an annual report of financial performance that public companies must file with the Securities and Exchange Commission.
Here is what Microsoft’s Form 10-K listed as its fiscal year in 2021:
- A fiscal year is a 12 month period (52 weeks) chosen by a company to report its financial information.
- When a companies fiscal calendar does not align with the standard calendar dates, these are called non-standard fiscal quarters or a non-standard fiscal year.
- The standard calendar year starts on January 1st and ends on December 31st.
- According the to IRS, a fiscal year is 12 consecutive months ending on the last day of any month except December.
- If you are not sure where to find a companies fiscal calendar year, you can look on the companies 10-K report.
- Non-standard fiscal quarters are more commonly seen in companies who have uneven revenue streams. For example, a holiday decor shop may generate most of its revenue during the holiday months of Q4.
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