Accounting & Bookkeeping & Small Business Forum

[avalon]

Hi,

I'm a writer and I write e-books, then I make a website to sell them. I've been doing this since 2007, but only now, Aug-08 I finally incorporated (I'm applying for S-Corp). I wasn't sure if the business was going to work or not, so I didn't want to have the burden of forming a legal structure and then abandoning it later. My problem now is that I don't know how to report all the income and deductions that I incurred before the corporation legally exists ($35.000 until the date of the incorporation).

All the books I've been reading only talk about the date you started doing business as being the moment your product or service was available, but nobody mentions if the date you incorporated is relevant or not. I figure it must matter because the corporation is another entity, right?

How can you claim the corporation was doing business before it even exists? If you can't then, how much trouble can I have for doing business without any legal structure?

Ps. In 2008 I filled jointly with my husband reporting all my income from 2007 as being income from a business, even though there was no "legal business". We followed Turbo Tax's directions and filled the forms it recommended to us. I paid self-employment taxes and took the deductions I thought I was entitled to (office supplies, advertising, education and training). Can we have any problems for doing it without
having a legal business structure?

[dp1903]

Your "legal" form of business before incorporating was "sole proprietor" and Turbo Tax filed the correct forms for you, a Schedule C, right? There may also have been a schedule for depreciation if you had any.

You'll want to transfer any asset, liability, and equity balances from the sole proprietorshuip to the S-corp. I'd seek someone competent to do this for you. Good luck with the new biz!! :D