Fiscal Year in USA

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What is the Fiscal Year in the USA?

A Fiscal year is an accounting or financial year customized for all the financial transactions and accounting procedures and is 12 consecutive months which is reckoned for taxation purposes. The fiscal year in the USA for the federal government starts from Oct 1st to Sep 30th of the next calendar year.

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Importance of Fiscal Year

  • When a company starts a fiscal year, they initiate fundamental analysis and budget forecasting.
  • Financial reports are based on transactions related to the company's fiscal year and are generated at the end of the fiscal year.
  • Taxation and audit will be done after the fiscal year ends as per the due date.
Fiscal-Year-in-USA

Fiscal Year Starting Dates and its Origin in the USA

Generally, the fiscal year in the USA starts from Oct 1st to SEP 30th of the next calendar year or 365 days.

Here is a crucial point related to the US Fiscal year, i.e., Before 1976, the fiscal year started on July 1 and ended on Jun 30 of the next calendar year. The Congressional Budget and Impoundment Control Act changed what is known as the transitional quarter from 1st 1976 to 30th Sep 1976.

The first fiscal year of the US was Jan 1st, 1789. Then the beginning date, Jan 1st, was changed to JUL 1st in 1842. And finally, from Jul 1st to Oct 1st, it is today.

When a fiscal year starts in the USA:

Oct 1st of every calendar year;

When the fiscal year ends in the USA:

The fiscal year ends on Sep 30 of the next calendar year.

Every US has a fixed budget, and this budget is the collection of documents that contain the message of the president and the budget proposals for a proposed fiscal year.

Example

Here we have some details related to the US previous fiscal years.

  • FY 2020 is started from Oct 1st, 2019, to Sep 30th, 2020
  • FY 2019 is started from Oct 1st, 2018, to Sep 30th, 2019·      
  • FY 2018 is started from Oct 1st, 2017, to Sep 30th, 2018

A Company can choose its financial year as a fiscal year or calendar year based on their requirement and revenue cycle. Generally, the fiscal year for the companies is also the same. But some businesses choose different dates for tax purposes. Businesses having seasonal profits also take some other date for the revenue adjustments. Annual financial reports and tax payments will be made based on the company’s fiscal year. Companies take this fiscal year based on their accounting and auditing requirements also.

Generally, non-profitable organizations will have different dates because they start receiving their grants and rewards. In the US, any company can adopt their financial year as a fiscal year by submitting their income tax return with dates mentioned per fiscal year. If they want to change the calendar year, they have to seek legal permission and follow its procedures.

Maybe the beginning date of the company's fiscal year is different from the fiscal year. Many companies report quarterly if companies opt for the calendar year as their business. At the end of the fiscal year, the financial statements related to the business should be finalized and reported.

Except C corporations, which have complex accounting policies, most companies use the calendar year as their fiscal year.

Companies use a fiscal year to track revenue and costs. The duration of the fiscal and the financial year are the same, i.e., consecutive 12 months. However, dates may coincide or be different. Companies use fiscal years to match the revenue cycles of the government.