Calendar Year Definition - Investopedia

A calendar year is a one-year period between January 1 and December 31, based on the Gregorian calendar. The calendar year commonly coincides with the fiscal ... Business BusinessEssentials WhatIsaCalendarYear? Acalendaryearisaone-yearperiodthatbeginsonJanuary1andendsonDecember31,basedonthecommonly-usedGregoriancalendar. Forindividualandcorporatetaxationpurposes,thecalendaryearcommonlycoincideswiththefiscalyearandthusgenerallycomprisesalloftheyear'sfinancialinformationusedtocalculateincometaxpayable. KeyTakeaways Acalendaryearisaone-yearperiodbetweenJanuary1andDecember31,basedontheGregoriancalendar.Thecalendaryearcommonlycoincideswiththefiscalyear forindividualandcorporatetaxation.Manycompaniesusethecalendaryearastheirfiscalyear,whileotherschooseadifferentstartandenddatefortheir12-monthperiod. UnderstandingaCalendarYear Thecalendaryearisalsocalledthecivilyearandcontainsafull365daysor366foraleapyear.Itisdividedupintomonths,weeks,anddays.TheGregoriancalendaristheinternationalstandardandisusedinmostpartsoftheworldtoorganizereligious,social,business,personal,andadministrativeevents. Calendarsareusefulforindividualsandcorporationstomanagetheirschedules,planeventsandactivities,andmarkspecialoccasionsinthefuture.Theadventoftechnologyhasmadeplanningeveneasier,ascalendarsarenoweasilyaccessiblethroughcomputers,smartphones,andotherpersonaldevices. Whencommitmentsaremany,onecannotrelyonmemoryalonetokeepthingsorganized. Somepartsoftheworldusethestandardaswellasreligiouscalendars.Forexample,theGregoriancalendarwasadoptedinIndianationwidewhentheBritishcolonizedthecountry.AlthoughmostofurbanIndiacontinuestouseittoday,devoutHindusinmoreruralpartsofthecountrymaycontinuetouseadifferentregional,religiouscalendar,wherethebeginningandendofyeardatesdiffer. Acalendaryearfor individualsandmanycompaniesisusedasthefiscalyear,ortheone-yearperiodonwhichtheirpayabletaxesarecalculated.Somecompanieschoosetoreporttheirtaxesbasedonafiscalyear.Inmostcases,thisperiodstarts onApril1andends onMarch31,andbetterconformstoseasonalitypatternsorotheraccountingconcernsapplicabletotheirbusinesses. CalendarYearvs.FiscalYear AcalendaryearalwaysrunsfromJanuary1toDecember31.Afiscalyear,bycontrast,canstartandendatanypointduringtheyear,aslongasitcomprisesafull12months.AcompanythatstartsitsfiscalyearonJanuary1andendsitonDecember31operatesonacalendaryearbasis.Thecalendaryearrepresentsthemostcommonfiscalyearinthebusinessworld. Largecompanies,includingGoogle'sparentcompanyAlphabet,Amazon,andMeta(formerlyFacebook)usethecalendaryearastheirfiscalyear.Othercompanieselecttomaintainafiscalyear.WalmartandTarget,forexample,havefiscalyearsthatdonotcoincidewiththecalendaryear. SwitchingFromaCalendartoaFiscalYear Individualswhofileusingthecalendaryearmustcontinuetodosoeveniftheybeginoperatingabusiness,soleproprietorship,orbecomeanScorporationshareholder. YoumustfirstobtainapprovalfromtheInternalRevenueService(IRS)byfilingForm1128ifyouwanttoswitchfromthecalendaryearreportingtofiscalyearreportingforyourtaxfilings. Generally,thosewhofollowthecalendaryearfortaxfilingsincludeanyonewhohasnoannualaccountingperiod,hasnobooksorrecords,andwhosecurrenttaxyeardoesnotqualifyasafiscalyear. AdvantagesandDisadvantagesofa CalendarYear Perhapsthebiggestadvantageofusingthecalendaryearissimplicity.Forsoleproprietors andsmallbusinesses,taxreportingisofteneasierwhenthebusiness'staxyearmatchesupwiththatofthebusinessowner.Moreover,whileanysoleproprietororbusinessmayadoptthecalendaryearasitsfiscalyear,theIRSimposesspecificrequirementsonthosebusinesseswantingtouseadifferentfiscalyear. Oneofthoserequirementsiswhentaxfilingsaredue.TheIRSrequiresbusinessestofiletheirtaxesonthe15thdayofthethirdmonthaftertheendoftheirfiscalyear.Soifacompany'sfiscalyearendsonJune30,thebusinessmustfileitstaxesbySeptember15. Incertainindustries,usingadifferentfiscalyearmakessense.Forexample,seasonalbusinessesthatderivethemajorityoftheirrevenueduringacertaintimeoftheyearoftenchooseafiscalyearthatbestmatchesrevenuetoexpenses. RetailerssuchasWalmartandTargetuseafiscalyearthatendsonJanuary31ratherthanDecember31becauseDecemberistheirbusiestmonthduetotheholidayseason,andtheyprefertowaituntiltheholidayseasonendstocloseouttheiryear-endbooks. Businessesthatsolicitinvestmentdollars—whetherfromventurecapitalorcrowdfundingplatforms—mayfinditadvantageoustouseafiscalyear.Forexample,ifabusinessreceivesabiginvestmentinNovemberorDecember,butdoesnotbeginincurringmajorexpensesuntilFebruaryorMarch,usingacalendaryearcouldresultinanoneroustaxburden. ArticleSources Investopediarequireswriterstouseprimarysourcestosupporttheirwork.Theseincludewhitepapers,governmentdata,originalreporting,andinterviewswithindustryexperts.Wealsoreferenceoriginalresearchfromotherreputablepublisherswhereappropriate.Youcanlearnmoreaboutthestandardswefollowinproducingaccurate,unbiasedcontentinour editorialpolicy. InternalRevenueService."TaxYears."AccessedFeb.11,2022. NASAGoddardSpaceFlightCenterEclipseWebSite."Calendars,"Select,"2.TheGregorianCalendar."AccessedFeb.11,2022. Alphabet,Inc."AlphabetAnnouncesFourthQuarterandFiscalYear2021Results,"Page1.AccessedFeb.11,2022. AmazonInvestorRelations."FAQs,"Select,"WhatisAmazon'sfiscalyear?"AccessedFeb.11,2022. MetaInvestorRelations."MetaReportsFourthQuarterandFullYear2021Results."AccessedFeb.11,2022. TargetInvestors."UnitedStatesSecuritiesAndExchangeCommission,Form10-K,ForthefiscalyearendedJanuary30,2021:Cover."AccessedFeb.11,2022. WalmartInvestors."ShareholderInformation:FAQs,"Select,"WhatisWalmart'sfiscalyear?"AccessedFeb.11,2022. InternalRevenueService."PayAsYouGo,SoYouWon’tOwe:AGuidetoWithholding,EstimatedTaxes,andWaystoAvoidtheEstimatedTaxPenalty."AccessedFeb.11,2022. CompareAccounts AdvertiserDisclosure × TheoffersthatappearinthistablearefrompartnershipsfromwhichInvestopediareceivescompensation.Thiscompensationmayimpacthowandwherelistingsappear.Investopediadoesnotincludealloffersavailableinthemarketplace. Provider Name Description RelatedTerms FiscalYear-End:WhatYouNeedtoKnow Theterm"fiscalyear-end"referstothelastdayofaone-yearor12-monthaccountingperiod.Itisusedtocalculateannualfinancialstatements. more WhatDefinesaFiscalYear? Afiscalyear(FY)isaone-yearperiodoftimethatacompanyorgovernmentusesforaccountingpurposesandpreparationofitsfinancialstatements. more WhatIsaTaxYear? Ataxyearisthe12-monthcalendarperiodcoveredbyataxpayer'sannualtaxreturn. more WhatDoesYeartoDate(YTD)Mean? Yeartodate(YTD)referstotheperiodoftimebeginningthefirstdayofthecurrentcalendaryearorfiscalyearuptothecurrentdate. more WhatIsaShortTaxYear? Ashorttaxyearisafiscalorcalendaryearperiodoffewerthan12months.Itcanoccurwhenanewbusinessopensoranaccountingperiodchanges. more Inflation-AdjustedReturnDefinition Theinflation-adjustedreturnisameasurethataccountsforthereturnperiod'sinflationrate. more PartnerLinks RelatedArticles Stocks WhyCompaniesReportEarningsatDifferentTimes RothIRA WorththeWait:TheRothIRA5-YearRule PersonalFinance 2022PersonalFinanceCalendar SmallBusinessTaxes 5TaxBreaksforSmallBusinesses RothIRA AComprehensiveGuidetoTaxTreatmentsofRothIRADistributions GovernmentSpending HowtheFederalBudgetProcessWorks