Expert: Ed McFarland - 10/14/2005

Question
Why does a Fiscal Year exist?  (ie, how does a company benefit from not operating on a calendar year?)

Thanks.

Answer
A fiscal year exists for the convience of recordkeeping. Often it matches when the company started. Things like closing inventory can be done more easily during other times of the year.

I know some accountants who have small businesses and keeps them off calender years to more easily separate their business from their personal returns.