Year to date (YTD) is a time period for tracking and measuring data. The period of time spans from the first day of a 12-month period up to the current date of the report. YTD is used as a measurement for business accounting and budgeting purposes such as tracking HR and payroll spending, annual budgets, and performance reports.
YTD, MTD, QTD
Month to date (MTD) a time interval or period of accounting equal to one month
Quarter to date (QTD) a time interval or period of accounting equal to one business quarter (three months)
Year to Date: Fiscal Year vs. Calendar Year
When it comes to deciding how to track your payroll and hiring data, and other information, organizations have two choices: using the regular calendar year or a fiscal year.
Calendar year
This YTD measurement is calendar-based. Most countries, including the US, are on the Gregorian calendar which runs from January 1st to December 31st. Therefore, the first day of the year is January 1st, and the YTD metric will cover the time period up to December 31st, the last day of the year. Most businesses base their financial reporting on this traditional calendar system.
Fiscal year
Other organizations, preferring alternate start and end dates, report using a fiscal year. Though the reporting year still equals 12 months, the actual start and end dates differ from the calendar year.
Example: a company’s fiscal year might have a start date of June 1st, ending on May 31st of the following year. Many organizations use fiscal years, including the US government, which starts its fiscal year on October 1st and ends it on September 30th of the following calendar year.
How do businesses use year to date
Because organizations are mandated by federal and state law to keep track of certain employee payroll and hiring data, much of this information is captured and reported by organizations using either a fiscal or calendar year to date system.
Spending: Organizations may track gross pay, net pay, deductions, benefits, taxes, and expense reimbursement. Organizations are responsible for tracking this information each fiscal year.
Human resources: Organizations must be careful of their recordkeeping practices including monitoring accrued vacation and sick time to remain compliant with employment law.
Accounting: The strategic capture of data using year to date intervals is important not just for hiring and payroll, but for all business budgeting.
Financial planning: Year to date figures give benchmarks needed for future planning.
Why is YTD payroll an important metric?
Calculating YTD payroll gives businesses important benchmarks they can use for financial comparisons from year to year. Year to date data can then be used to estimate payroll for the upcoming budget and identify potential payroll issues.
Examples of the use of YTD payroll data:
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YTD payroll summary reports and YTD payroll tax liability reports. Regular tracking of YTD data is used for tax reporting information required by the IRS in Forms 940 and 941 including:
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Number of employees
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Total payroll
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Withholding
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Social Security and Medicare paid
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YTD data helps organizations determine ROI for job roles as well as the real costs associated with regions where they already do business. Businesses use various current and historical YTD payroll reports to calculate the average yearly cost per employee to make informed decisions, giving an instant comparison of compensation costs. To do this, businesses may filter data by:
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Cost by job category
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Cost by employee hire classification (full time, part time, or independent contractor)
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State taxes due
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Healthcare costs
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Workers compensation costs
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Year to date info can be used to determine profit margins. In addition to traditional accounting, it also can be used for external auditing purposes.
How helpful is YTD?
Year to date payroll information, by itself, will not present a complete forecast of an organization. However, it is an essential component of many budgeting baselines for tracking annual spending and other budgeting needs. Along with YTD payroll data, businesses use familiar HR and payroll metrics including YTD return on investments and earnings before making decisions on hiring.
Using current and historical YTD data helps organizations get a sense of their financial health, monitor critical accounting processes and avoid overspending or underspending. But be aware of the quality of your data—YTD data may not be fully complete, and estimates may change as your teams reconcile and finalize transactions. YTD statistics should not be relied on as an audited financial tool.
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