What is a Financial year?

Financial year (Definition)

Financial year refers to a 12-month period over which a business operates. It is used by a business to calculate a budget along with profits and losses for the year, as well as for tax purposes. The governments require all businesses to finalise their books then complete and lodge their tax returns once the financial year is complete. The government will then determine how much tax your business owes for that financial year. The end of financial year is also an excellent time to check on the financial health of your business and take note of any areas for improvement.

The financial year ends on different dates around the world. In Australia it is June 30, much of Europe is December 31, while the UK’s financial year ends on April 5.