What is Accounting Period?
Nexa Consultancy | Startup & Finance Glossary
An Accounting Period is a specific span of time over which a company's financial statements are prepared. The goal is to provide stakeholders with a regular, consistent look at the company's performance. Common accounting periods are a month, a quarter (three months), or a full financial year.
For Startups: While the mandatory accounting period for tax and corporate law compliance in India is the financial year (April 1st to March 31st), most startups operate on a monthly accounting period. This allows founders and investors to track key metrics like Monthly Recurring Revenue (MRR) and burn rate more frequently, enabling faster, more agile decision-making. Monthly financial reports are a standard requirement for venture-backed startups.
Example: A SaaS startup closes its books at the end of each calendar month to generate a P&L statement, which shows its revenue and expenses for that specific month.