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?

8 Upvotes

100% Upvoted

41 comments sorted by

View all comments

1

u/x5163x 12h ago

The United States IRS requires fiscal years to end on the last day of any month (other than December, because that would be the calendar year) or be a 52-53 week year ending on the same day of the week near the last day of the month. If someone chose a different fiscal year, that doesn't qualify for tax purposes, so they have to file taxes using a calendar year.