Obviously this should be asked of an accountant, but I"m curious what others here have done.
If you transitioned from running your business without officially registering it, to later on incorporating it, do you begin your official records on the date you incorporate, or can you begin them prior to this date?
As I posted earlier this month, we just recently incorporated. However, I don't know what to do about our records from earlier this year, before our incorporation.
Depends on how the business is structured. A corporation is going to have much more stringent accounting requirements than a sole proprietorship. If you're a corporation, talk to an accountant.
If you're a sole proprietor, you really aren't required keep detailed accounting records -- although this is a HORRIBLE idea. But let's say that for whatever reason, you haven't been keeping good records. And let's say that you wake up one morning and decide to start. I would do one of two things:
1) Start on the first day that your company officially existed. It's October 24 now, so let's say your company officially came to life on August 15 of this year. I would start my accounting on August 15. Start with your opening balance as of the start of business on August 15 and put it to owner equity. Sloppy, but it puts out the fire.
2) Start on the first day of the year. There are actually some cases where you specifically don't do this and I'm too tired to remember them right now. Whether you start bookkeeping on January 1 2013 or 2014, it's a nice clean start. As above, count your opening balances as owner equity.
Technically if you have any obligations in the business name (such as your opening cash is actually from a business loan that you're currently repaying) you'll want to find a better way to handle things. But because a sole proprietorship is legally one and the same as you (just a fictitious name), any obligations in the business name are, for all intents and purposes, obligations in your name.
Find a good accountant and get some direct answers. You can get a mountain of information for less than $100 and a little research.
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Keep all records from the day you unofficially launched your business, if you are in the U.S, the I.R.S has the right to audit you at anytime which may need your records and if you don't have them, then you could be fighting an uphill battle
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There are different structures of a "corporation".
Do you have an EIN? Or are you a single member organization that is permitted to file taxes through your SSN?
If the former, then you will need to file for both separate periods. Income before you were incorporated you would need to place in your personal taxes under a Schedule C. After you were incorporated, you would need to file taxes for the business using the EIN.
If the latter, then you would need to just report all income/loss in the schedule C on your personal tax return.
Source: I originally went to school for Accounting, but I would still consult an Accountant.