When running a business or managing company accounts, it’s important to know the difference between a fiscal year and a calendar year. These terms come up often in company registration, tax filing, and financial reporting. Understanding these terms can make managing your business much easier.
What is a Calendar Year?
A calendar year is the normal year we all follow. It starts on January 1 and ends on December 31. People use it for daily life, holidays, and personal accounting.
Example:
- January 1, 2025 to December 31, 2025
What is a Fiscal Year?
A fiscal year is a 12-month period used for business accounting and financial reporting. Unlike a calendar year, it can start on any date and ends 12 months later. Companies and governments choose a fiscal year that fits their business cycle.
Example:
- July 1, 2023 to June 30, 2024
Key Differences Between Fiscal Year and Calendar Year
| Aspect | Fiscal Year | Calendar Year |
|---|---|---|
| Duration | 12 months (start date varies) | 12 months (Jan 1 to Dec 31) |
| Purpose | Business accounting & reporting | Everyday use & personal events |
| Flexibility | Can start any month | Fixed start and end |
| Used by | Companies, governments | Individuals and general use |
Why It Matters for Your Business
Choosing the right type of year affects:
- Tax filing deadlines
- Financial reporting periods
- Business planning and budgeting
In Nepal, many companies follow the fiscal year from July 16 to July 15 the next year, in line with the Nepalese tax calendar.