What is the fiscal year? The fiscal year refers to the calendar the governments use. Unlike the traditional calendar year which starts from January 1st, the fiscal year for the U.S. government starts on October 1st, and ends on the last day of September the following year.
Abbreviated to FY, it isn’t uncommon to see the FY2020, FY2021, etc. when seeing upcoming budget talks for the government. FY is used mostly for accounting but it can also be used for other aspects of the government. The reason why the U.S. government—along with most other governments use a fiscal year is to plan ahead.
The best possible standard of this is the funding legislation to determine pay raises for employees who work for the government. The federal government plans the pay raise the workers are going to get early on and this opens up plenty of time to decide on it. This is why the funding legislation is set for the calendar year rather than the fiscal year.
Other uses of fiscal year
The fiscal year isn’t just used by governments but corporations as well. This is where the fiscal year differs from one to another. While most companies’ fiscal year is pretty much the same as the calendar year, some corporations, especially if large can have their own fiscal years.
For example, Apple’s fiscal year start the last Sunday of September and ends on the last Saturday of September, the following year. Therefore, if you’re looking for the financial results of companies, make sure to keep yourself up to date with their fiscal year.
Take note that the fiscal year doesn’t need to be 365 days/52 weeks. In the given example above, the fiscal year can stretch longer than a full-year.