A fiscal year is a concept that you will frequently encounter in finance.

Many firms
elect to use a different 12-month cycle than the one we are accustomed to, since
the Internal Revenue Service gives tax-paying businesses such an option. Failing to
take the differences between a fiscal and a calendar year into account can therefore
result in accounting mistakes.
Calendar Year
A calendar year is simply the conventional year that begins on January 1 and ends
on December 31. Most businesses use the calendar year for financial calculations. If
such a firm refers to its 2012 full-year profits, for example, it is talking about the
total money it has earned between January 1, 2012, and December 31, 2012. In the
absence of an indication to the contrary, it is assumed that a firm uses the calendar
year. However, to eliminate any possible confusion, the annual reports of most firms
that use the calendar year will specifically state the beginning and end dates
covered by the income statement, even if these days coincide with the beginning
and end of the calendar year.
Fiscal Year
In finance, a fiscal year is a 12-month period that ends on the last day of any month
except December. A fiscal year may end on April 30, for instance. Such a fiscal year
would start on May 1 of the previous year, since it must cover 12 full consecutive
months. For instance, the fiscal year of a firm that has ended on April 30, 2012,
would have begun on May 1, 2011. To find the start date of a fiscal year, add one
day to the end date and then go back a full year. If the last day of a fiscal year is
August 31, 2011, adding one day will take us to September 1, 2011. Going back a
full year results in September 1, 2010, which is the start day of that fiscal year.
Taxation
The IRS allows businesses to chose any fiscal year they like, if the Internal Revenue
Code and the Income Tax Regulations do not mandate a specific beginning and end
date applicable to the firm. A business is generally mandated to use the calendar
year if it does not keep books or records, which may be the case for self-employed
individuals.
Switching to a Fiscal Year
If you have already filed an individual tax return using a calendar tax year and you
start to operate as a business or sole proprietorship, begin to receive income from a
partnership or acquire shares in an S corporation, you must continue to use the
calendar year. Before you can switch to a fiscal year, you must first obtain IRS
approval . Tax filers who use a fiscal year must send their tax returns on the 15th
day of the fourth month following the conclusion of their fiscal year. If, for example,
your fiscal year ended on June 30, your tax filing deadline is October 15.