What is a fiscal year?

Whenever we speak of fiscal year or financial year, we refer to the twelve-month period that we use to balance the accounts of financial activities and calculate the reports we need for our business. Although it is true that these twelve months of rigor are relative (since the completion of a fiscal year does not always have to coincide with the calendar year), the truth is that in many jurisdictions it is required to obtain this report every year. So what are the main uses of a financial year? We analyze them below.

What is a fiscal year for?

All natural or legal persons who present their fiscal year -that is, the financial statein which the business is located at an economic and financial level - they do it to evaluate the performance of the activity on an annual basis, make adjustments (if necessary) when the performance is not as expected, plan possible investments for future growth and, especially, to calculate the taxes that the natural or legal person will have to pay each year.

The fiscal year is a very important type of report for both natural and legal persons, since its preparation serves as a basis for the accrual of many of the taxes that we will have to pay throughout the year.

When does the fiscal year begin and end?

As we have already advanced, the fiscal year in Spain usually runs from January 1 to December 31 of that same year. This exercise is divided, in turn, into monthly or quarterly accounting periods.

However, this period may change depending on the country in which we are located. For example, Costa Rica's fiscal period begins on October 1 of one year and ends on September 30 of the next year, while the United States fiscal year can end in any month of the year except December. It all depends on the laws that regulate the country's accounting.

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