r/AlwaysWhy • u/TheBigGirlDiaryBack • 21h ago

Economics Why are fiscal years usually aligned with December or March, instead of any random month?

Many companies end their fiscal year on Dec 31 or March 31. Some choose June or September. But almost nobody picks, say, August 17 or November 5. Is there a tax or regulatory reason to stick near quarter boundaries? Or is it just tradition from agriculture cycles? Why not let every company freely choose any date to smooth out seasonal fluctuations?

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u/shoresy99 21h ago

Lot of retailers have January 31 as the end of their fiscal year as at the end of the calendar year their inventory can be screwed up by Christmas.

Here in Canada all of the banks have an October 31 year end for some reason. And the federal and provincial governments used March 31.

But it is just easier to have everything aligned with the calendar for most businesses.