However, most companies' fiscal year also coincides with the calendar year, which starts January 1. For the most part, it is simpler and easier that way. For some organizations, there are advantages for starting the fiscal year at a different time. For example, businesses that are seasonal might start their fiscal year July 1 or October 1. A business that has most of its income in the fall and most of its expenses in the spring might also choose to start its fiscal year on October 1. That way, they know what their income will be for the year, and can adjust their expenses to maintain their desired profit margins.
Some businesses might choose to start their fiscal year in April for tax purposes. They can shift income and expenses to a month outside of the fiscal year to improve their taxable income.
Federal Government Fiscal YearOne of the most important fiscal years for the economy is the Federal Fiscal Year, which defines the U.S. government's budget. It runs from October 1 of the prior year through September 30 of the year being described. For example:
- FY 2012 is from October 1 2011 through September 30 2012.
- FY 2013 is from October 1 2012 through September 30 2013.
- FY 2014 is from October 1 2013 through September 30 2014.
- FY 2015 is from October 1 2014 through September 30 2015.
The Federal fiscal year gives elected Congressmen, who begin office in January, time to participate in the budget process for the next fiscal year. After they start office, the President submits the budget for that next year by the first Monday in February. Congress, including the newly elected officials, has until September 30 of that calendar year to approve the budget. If it doesn't, then some non-essential government agencies may start to shut down. Usually Congress will enact temporary measures to keep the government running until they work out their disagreements about the budget.
For example, a new Republican majority was voted in during the mid-term Congressional elections in November 2010. They were able to participate in the FY 2012 budget, which was submitted by President Obama in February 2011, a month after they took office.
However, before they could even consider the FY 2012 budget, they had to finalize the FY 2011 budget. Thanks to the election, the lame-duck Congress had missed its September 30 2010 deadline to agree on the FY 2011 budget. Instead, they waited until the mid-term elections were over. Fortunately, Congress had approved temporary spending orders to keep the government running.
The disagreement over the FY 2011 budget went on until April 2011, at which time the temporary spending orders were to expire. There was a real threat of a government shutdown. It was averted at the last minute when the President and Congress agreed to $80 billion in spending cuts.
The FY 2012 budget also missed its subsequent approval deadline, which was September 30 2011. Once again, temporary spending orders allowed the government to keep running until the FY 2012 budget was quietly approved by December 31, 2011.
Federal Fiscal Year BudgetsWant to know more about the Federal budget for each Fiscal Year? Track the progress with these articles:
- Fiscal Year 2013 - The Obama administration expected to take in $2.902 trillion in revenue and spend $3.803 trillion, creating a deficit of $901 billion. This is the first time the deficit has been less than $1 trillion since the 2008 financial crisis.
- Fiscal Year 2012 - The Federal government received $2.469 trillion in revenue, but spent $3.796 trillion, creating a $1.327 trillion deficit.
- Fiscal Year 2011 - The deficit for FY 2011 was $1.3 trillion, the third largest in history.
- Fiscal Year 2010 - President Obama's first budget created a record $1.6 trillion deficit.
- Fiscal Year 2009 - President Obama added the Economic Stimulus Act to President Bush's FY 2009 budget to fight the recession.
- Fiscal Year 2008 - This pre-recession budget focused on the War on Terror.
- Fiscal Year 2007 - The last year before the Great Recession had a deficit of only $162 billion.
- Fiscal Year 2006 - The War on Terror increased military spending to $566 billion, making it the highest budget item, even more than Social Security at $550 billion.