Image courtesy of Pixabay.com

Image courtesy of Pixabay.com

A “fiscal year” refers to the 12-month period on which an organization keeps its books.

For the vast majority of main-street small businesses, their fiscal year is the calendar year. Meaning, a year for tax and bookkeeping purposes starts on January 1 and ends on December 31. This is common even among much larger companies — in fact, according to Wikipedia, 65% of publicly traded companies use the calendar year as their fiscal year.

C-corporations are free to use any fiscal year they like. For example, a C-corp could choose to have their fiscal year run from July 1 to June 30. Other entities must show a business purpose to having a fiscal year other than the calendar year. (A further discussion of that topic is beyond the scope of this article.)

The federal government uses a fiscal year beginning on October 1 and ending on September 30. The fiscal year for the State of Iowa starts July 1 and ends June 30.

For more tax and accounting terms, check out the Glossary page on this website.

“This blog post, along with comments that may follow, should not be considered tax advice. Before you make final tax or financial decisions, please secure a professional tax advisor to give you advice about your unique situation. To secure Jason as your accountant, please click on the ‘Services’ link at the top of the page.”