Natural business year

Natural Business Year
Definition: A year based on the business cycle of a specific firm, rather than the calendar year.

Natural business year
The natural business year of a business is the 12 months ending when the activities of the business are at their lowest point.
Nature (of audit procedures) ...

A taxpayer is deemed to have established natural business year through the use of a mechanical test if it satisfies the '25-percent gross receipts test.' See Rev. Proc. 2006-46, 2006-2 C.B. 859.

Natural Business Year (business term)
Minimum Distribution Requirements and Taxes from Section 401(A), 403(A), 403 Retirement Plan or Ira (insurance term)
Nonresident Alien (business term)
Calendar Year Experience (insurance term)
new year's day ...

Fiscal years often attempt to follow natural business year cycles, such as in the retail business where a fiscal year may end on January 31 (allowing all of the holiday rush, and corresponding returns, to cycle through).

However, many entities use the natural business year, referring to a year ending at the annual low point in business activity or at the end of a season. For example, governmental units often end their fiscal year on June 30.

The 2001 receipts would be offset by 2001 expenses, although these expenses would relate to 2002 receipts. A fiscal year starting on July 1, August 1, or September 1 would more accurately reflect income for the natural business year.

See also: Calendar year, Accounting period, Expense, Values, Accrual basis