How to handle expense transactions prior to incorporation date

Question

Can the fiscal start date of a new corporation be dated prior to the incorporation date? I'm a small business bookkeeper for a client who has registered his new company as a corporation as of March 3 but he has expenses dating back to February 4. I haven't finished entering the history...can I back-date the fiscal start to February 4 so he can claim those expenses? Sage 50 will let me do that but is it permitted for a corporation to do that? Thank-you for any advice.

Erzsi_I · Answer

Hi Shelly Henkel , Thanks for reaching out. The blog Top 3 items to do when setting up a new company has a section with tips on selecting your start date in a Sage 50 CA company data file. I've copied the content below: 
 Tip #1: Talk to your Accountant and Set Fiscal Start and End dates 
 Start by deciding what your Earliest Transaction Date will be. Two good choices are: 
 
 The first day of your calendar year 
 The first day of a fiscal period

" A fiscal year is your business's annual reporting period. All kinds of reports are based on the fiscal year, including taxes." - thebalance.com 
 
 A fiscal year should be a period of 12 months. Anything more than 12 months will result in muddled yearly reports. 
 
 Note *: If you decide to change the ending date but it's greyed out, this means that a transaction using this date has already been posted into the system blocking this date change. 
 
 Important* : The starting date cannot be changed once set, the whole database has to be recreated. Reasons why to plan ahead and know your dates! Hope this helps! Erzsi

Sage 50 Canada

How to handle expense transactions prior to incorporation date

Tip #1: Talk to your Accountant and Set Fiscal Start and End dates

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