Year to Date (YTD)

What does year to date mean?

The term year to date (YTD) refers to the period of time from the beginning of the current year to either the present or a specified date before the year’s end. It is commonly used in accounting and finance for reporting purposes. Year to date reports are also useful in measuring the performance of an organization, analyzing business trends, determining investment returns, and estimating quarterly tax payments. In addition, year to date is often applied to payroll. The YTD payroll is from the beginning of the year (calendar or fiscal) to the current payroll date. 

How do you calculate the year to date?

Calculating year to date information depends on whether it’s referring to the calendar year or the fiscal year (any 12 month period an organization uses for accounting purposes). It’s important to note that not all organizations follow a fiscal year that begins on January 1. 

For example, if Company A uses the calendar year and is looking at YTD data on June 1, then their year to date would be calculated as the time period between January 1 and June 1 (six months).

If Company B starts their fiscal year on July 1 and is looking at YTD data on June 1, then their year to date would be calculated from July 1 through June 1 (11 months). 

What is year to date revenue?

Year to date revenue describes the amount of money an organization or independent contractor has earned since the beginning of the year (calendar or fiscal), before expenses. YTD earnings is the amount of money earned after subtracting expenses. Organizations use both year to date revenue and earnings to track financial goals. 

Is year to date gross or net?

Year to date is calculated on gross figures, before expenses are taken out. In reference to YTD payroll, it is the amount an employee earns before taxes and deductions are subtracted. Year to date earnings refers to net amounts.

Why is year to date important?

Successful businesses understand the power of data. The right information can help you understand and improve business processes, can give an accurate snapshot of where the business currently stands, and can help owners make informed decisions for their company’s future. Year to date is helpful for business owners in several ways:

• Gives information to track performance for the current year

• Allows for easier comparison with previous years’ performance

• Provides data for growth projections or needed budget cuts

• Helps owners estimate quarterly tax payments

• Assists small businesses in predicting tax liability

• Supplies data to see where an organization stands with regard to budgets

• Helps with comparing the performance across companies, departments, and/or competitors

• Fulfills several payroll functions

Whether you’re a small, medium, or large business owner, a significant portion of expenses is paying wages. As an employer, paying attention to your year-to-date payroll expenses is important. Using YTD data can help you to compare employee payroll expenses to the annual budget and to determine the percentage of total costs that goes to payroll. It is also important for filling out employee W-2 forms, especially if you run payroll by hand. Year to date payroll information is also useful for employees when preparing their own taxes. 

Many small business owners use year-to-date information to carry out mid-year financial reviews of their business. It serves a valuable function in helping a business determine its progress. YTD analysis allows business owners to track financial decisions over the last six months, look at projections over the rest of the year, and make any needed adjustments or trajectory pivots. Year to date can provide essential information for a mid-year “financial checkup” and inform decisions on what needs to be done to achieve short-term and long-term company goals.