US & World Economies US Economy Fiscal Policy What Is a Fiscal Year? By Kimberly Amadeo Kimberly Amadeo Kimberly Amadeo is an expert on U.S. and world economies and investing, with over 20 years of experience in economic analysis and business strategy. She is the President of the economic website World Money Watch. As a writer for The Balance, Kimberly provides insight on the state of the present-day economy, as well as past events that have had a lasting impact. learn about our editorial policies Updated on September 13, 2022 Reviewed by Michael J Boyle Reviewed by Michael J Boyle Michael Boyle is an experienced financial professional with more than 10 years working with financial planning, derivatives, equities, fixed income, project management, and analytics. learn about our financial review board In This Article View All In This Article Definition and Example of a Fiscal Year How Does a Fiscal Year Work? Benefits of Fiscal Years Photo: The Balance / Laura Porter Definition A fiscal year is a 12-month period that an organization uses to report its finances. Fiscal years do not need to correspond to the calendar year, and organizations are generally free to choose when their fiscal years begin and end. Key Takeaways Fiscal years are 52 to 53 week periods that facilitate an entity's financial schedules and needs.A fiscal year differs from a calendar year in that it doesn't coincide with the weeks, months, and quarters a calendar year uses.The federal government uses a fiscal year for its budget. This fiscal year always starts on Oct. 1 and ends on Sep. 30 of the following year.C corporations and those that rely on seasons, such as agricultural companies, usually use the fiscal year. Definition and Example of a Fiscal Year A fiscal year is a 52 or 53 week period used by governments and businesses for financial planning, scheduling, and reporting purposes. Fiscal years are different from calendar years in that they are not required to match the Gregorian calendar used today to mark the months—except in specific circumstances such as small businesses. The most well-known fiscal year in the U.S. is the federal government's fiscal year, which begins on Oct. 1 and ends on Sep. 30. How Does a Fiscal Year Work? A fiscal year is designed to facilitate accounting procedures and financial reporting. Like a calendar year, a fiscal year can be broken down into four quarters of three months. A fiscal year can be 52 or 53 weeks—because one year isn't exactly 52 weeks. One year is 365.25 days, which cannot be divided evenly. Fiscal years are often designed to accommodate 364 days (52 weeks multiplied by seven days), leaving 1.25 days per year unused. The extra days—including leap days—are totaled up into another week which is tacked onto a future fiscal calendar every five or six years. A 52-week fiscal year always ends on the last day of any month. A 52–53 week fiscal year generally ends on the same day of the week in the same month each year except when the 53rd week has been added. Note Companies that can use fiscal years which don't coincide with calendar years can break their year up as they see fit to align with their industry. Benefits of Fiscal Years Using fiscal years that are separate from or organized differently than calendar years has several advantages. For the U.S. government, the fiscal year timing allows Congress to process legislation for appropriations. Additionally, it helps federal agencies implement the current years' budget, find funding for the following year's budget, and plan for the budget two fiscal years ahead of time. For example, President Joe Biden and the Congressional members elected in November 2020 took office in January 2021. The Biden administration proposed its FY 2022 budget on May 28, 2021. This was later than usual, so it gave the administration and Congress less time to seek funds for FY 2023 and plan for FY 2024. The image below demonstrates the typical budget planning timeline supported by the government's fiscal year. The National Retail Federation (NRF) has created a retail sales reporting calendar it calls the 4-5-4 calendar. The NRF breaks the fiscal year into "months" that alternate between four and five weeks. According to the NRF, this calendar lines up holidays and ensures comparable months have the same number of Saturdays and Sundays. The 4-5-4 calendar also adds a 53rd week when applicable—its fiscal calendar for 2021 through 2023 adds a 53rd week in the fiscal year 2023. Large corporations use different fiscal years to track revenue, costs, profits, and file reports with regulatory authorities. A corporation's taxes are due on the 15th day of the fourth month after its fiscal year ends. Partnerships, limited liability companies, and S corporations can use a fiscal year that is not a calendar year, as long as it meets the IRS definition of a tax year and it has approval to do so. Sole proprietorships must use the calendar year as their fiscal year because the IRS requires these owners to file their business taxes with their individual taxes. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. USAGov. "Budget of the U.S. Government." U.S. Government Publishing Office. "Budget of the United States Government," Select "Fiscal Year 2022." Congressional Research Service. "The Federal Fiscal Year." National Retail Federation. "National Retail Federation: 2021-2023 Retail Sales Reporting and 4-5-4 Merchandising Calendar." Internal Revenue Service. "Publication 509 (2022), Tax Calendars." Internal Revenue Service. "Accounting Periods and Methods," Pages 3-7.