fiscal year
Definition
A fiscal year is any 12-month period a business chooses to use as its official accounting and tax year, and it does not have to match the calendar year that runs from January to December. Many businesses pick a fiscal year that aligns with their natural business cycle, such as ending in June or September instead of December.
Example
A retail store might choose a fiscal year that ends on January 31st so that the busy holiday shopping season falls neatly in the middle of the year rather than at the end, making financial reporting much cleaner.
Watch Out
Once you choose a fiscal year for your business, changing it requires filing paperwork with the IRS and can create tax complications, so pick your start date carefully from the beginning.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.