What is a Reporting Cycle?
Cycles do not just dictate the flow of seasons, the recycling process, or life itself. They are also an essential aspect of our society’s financial and economic structure. Companies are required to cyclically report their financial and accounting documents to governing bodies and the public, as a means to communicate and regulate business dealings.
A reporting cycle is the specified time when a business’s financial statements must be recorded and analyzed by internal and external entities to understand its current standing. The cycles are made up of different reporting periods, also known as accounting periods.
When and How Long are the Financial Reporting Cycles?
These financial cycles typically fall under four periods of time. These time frames refer to the different types of reporting periods, as reported on a:
- Monthly basis
- Quarterly basis
- Biyearly basis
- Yearly basis
The calendar year, fiscal year, and reporting year
Annual reporting covers 12 months. If it is measured from January to December, this is a calendar year. Suppose the cycle falls outside December 31; this is referred to as the fiscal year. Such annual periods typically run from March to February or April to March. Corporations can decide for themselves what fiscal year will work best for their reporting.
The reporting year is the year in which the accounting report takes place. The date, year, and accounting period should always be stated within your financial statements each period.
What are the financial reporting cycles relevant to your industry?
Your business’s reporting timeframe will differ depending on the company’s structure, how much revenue it generates, and what kind of industry it is related to. These authorized reporting periods are as follows:
- Monthly Reports: For businesses whose revenue generation is greater than $6 million for a fiscal year or fiscal quarter
- Quarterly Reports: For businesses whose revenue generation is $6 million or less in a fiscal year
- Annual Reports: For businesses whose revenue generation does not exceed $500,000 for a fiscal year
Many seasonal businesses will also opt to report their finances at the end of a fiscal year instead of a calendar year. For example, retail stores will typically file their annual reports in a fiscal year that ends in February so that they can capture their busy season’s revenue generated in December and January.