Why do companies use fiscal year instead of the calendar year?
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Some form of convenience.
Imagine you own a ski resort. Like clockwork, you get your first skiable snow on October 1 every year. The last skiable snow melts on April 1.
You probably start prepping for your season sometime in August or September, and spend April and maybe May doing post-season work. But Jan. 1 is right in the middle of your season and your business is running at its heaviest. It would be massively inconvenient to have to worry about taxes then because there are a million other things going on. It’s also weird timing because it involves half of this season and half of last season.
Rather, it makes much more sense to deal with taxes during June and July when you have nothing else going on and know what the entire season’s profits and losses are.
Many businesses will shift their taxable year to better fall into a more convenient time of year. Add on top of this a sort of trickle-down effect. If you own multiple businesses, you may want to align all the businesses’ taxable years so you’re not doing taxes all year long. There are also rules designed to prevent manipulating taxable years in ways that disadvantage the government’s collection of taxes that may force a business to adopt a specific taxable year regard of what a specific owner may want.
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