A fiscal year is a twelve-month period with which a company organizes and plans its fiscal calendar. In this way, it is possible to carry out their respective tax obligations normally and plan the next fiscal year.
Companies set the beginning and end of their fiscal year freely, so this does not necessarily have to coincide with the calendar year. Thus it is possible to adapt the corresponding tax payments to the economic activity of the company. That is, taking into account its nature and possible seasonal or seasonal changes.
However, the most common is that the fiscal year begins on January 1 and ends on January 31. It is in Anglo-Saxon countries where it is more common for the calendar of the fiscal year to be adjusted to the school season, for example.
Throughout the 365 days that a fiscal year encompasses, companies carry out their commercial activity in accordance with the tax law of their territory to gradually pay the corresponding taxes.Financial year
Commitments throughout the fiscal year
During the extension of the fiscal year, companies and institutions must face a series of tax obligations according to their nature. In this sense, the payment of taxes such as VAT, personal income tax or Corporation Tax is common year after year.
The frequency with which these taxes are assumed varies in each one of them, since it can be annual as the Corporation Tax, or quarterly as the payment of VAT.
End of the fiscal year
With the end of the fiscal year, companies have the obligation to carry out some necessary procedures for its control and monitoring at the legal level. In this way, with the end of the year from the fiscal point of view, it is time to close the accounting books, as well as the balance sheet or the corresponding payment of year-end taxes.
Tags: right derivatives economic-dictionary