Happy new year! Or is it?

It’s the beginning of January, so businesses everywhere are wrapping up the past year and closing out their books for 2019. Or are they? They only are if they follow a calendar year for their accounting period. A calendar year is -- as you might expect -- 12 consecutive months beginning on January 1 and ending on December 31. But not every business follows a calendar year. Some adopt what’s referred to as a fiscal year (twelve consecutive months ending on the last day of any month except for December 31) and still others follow what’s referred to as a 52-53 week tax year (twelve consecutive months ending on the same day of the week, either on or closest to the last day of the calendar month). 

What’s the point of all these calendars? Is it to make things confusing? Is it because standing outside and waiting for a ball to drop when it’s freezing cold is dumb and it would be way more enjoyable to mark the new year in summer instead? No. (But it would be.) Businesses adopt different accounting periods to reflect the seasonal fluctuations that are specific to their business. For example, a business that receives the majority of their income during November and December may want to have their accounting period begin, rather than end, during this time to better reflect the positive impact of the holiday season on their yearly operations. Likewise a business that began operations in April may want a fiscal year that runs from April-March to more accurately assess income and expenses per one full year in business. And so on.

Regardless of which calendar you follow, we here at Numbers in Boxes wish you a very happy 2020!