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Taxes! By closing their books at the end of the financial year, a company is able to calculated how much Net Profit or Net Loss it has had for that year and pay taxes. This begins a new year and the books are "clear" and a new financial year begins.
This however, is not the ONLY reason that a company will close their books, other reasons include the fact that they have to show whether or not they are operating at an gain or loss, usually such things as Dividends or Bonds become due in that period of time. Stockholders need an financial accounting of the company for a period, which is the year.
In many jurisdictions, regulatory laws regarding accounting and taxation require such reports once per twelve months, but do not require that the period reported on constitutes a calendar year.
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What is a financial year?
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