Expense Prior to Incorporation

Hello. I need to know if I can capture this expense or not...


I PAID for a training course in September 2013, incorporated my business in November 2013 and the actual course took place December 2013 AFTER incorporation. Can I claim the expense with the business even though the payment occurred prior to it's incorporation?

Thanks for the replies!



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You didn't say whether or not you were in business prior to incorporating. If you were already in business as a sole proprietor, then the course would be expensed in that business.

If you were not in business prior to incorporating and the course training relates directly to earning incoming for the corporation, then I'm fairly certain you can expense/capitalize it as part of your startup costs.

Comments for Expense Prior to Incorporation

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Sep 23, 2016
Incorporating
by: Arlene, Canada

I have just incorporated my company of 9 yrs and also changed the name. Do I have to start a new set of books or can I just keep going.

Sep 23, 2016
Arlene
by: Lake

Yes you need to start a new set of books and open up new bank accounts.

The most difficult thing that sole proprietors need to be cognizant of is that the corporate entity has its own unique legal identity separate from you.

It is really important to understand that the corporation's money and other assets are no longer yours unlike when you ran your proprietorship. There are specific, inflexible rules on how to remove and cash and assets from the corporation so be sure to read up this topic BEFORE you have a taxable nightmare.

Check out my chat on this topic.

http://www.bookkeeping-essentials.com/loans-to-shareholders.html

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