Accounting 101: Part 4

A fiscal year is your organization’s 12-month accounting period — it doesn’t have to match the calendar year.

Most companies run January through December. Most PTAs and other nonprofits don’t — they run July 1 through June 30, lining up with the school year instead. That’s the default for new organizations, but it’s entirely up to yours: some start in September, some in October — whatever fits how your group operates.

There’s no wrong month to start in, but every organization needs to know its own fiscal year, because it affects:

• Budgets — a budget is built for one fiscal year at a time (see Part 3).
• Balance sheets — Carry Over Funds resets at the start of each fiscal year.
• Reports — anything filtered by “this year” uses your fiscal year, not the calendar year.

If your fiscal year runs July–June and someone asks for “this year’s” P&L in March, they mean July through the current date — not January through the current date.

Next: Closing the Fiscal Year