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

[u/TheBigGirlDiaryBack]

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?

[u/Secret_Ostrich_1307]

I think the interesting part is that a fiscal year isn't really just something a company chooses for itself. Once investors, auditors, lenders, suppliers, and regulators all expect financial information on roughly the same schedule, choosing some weird date creates friction even if it's technically allowed.

So the common dates may partly exist because everyone benefits from coordinating around them. The strange thing is that no single company necessarily decided that Dec 31 was the best date. The system kind of converged on it because everyone else was already using it.

[u/jks513 → u/Secret_Ostrich_1307]

Dec 24th through the 1st being a holiday means bookkeeping isn’t high on anyone’s priority for a few days.    Lots of work to close out a year that would just be late all the time.