Come new financial year and a new confusion has been seen by me with my customers which is , Should I make a new company in New Financial Year. The answer to this question is No. It can be Yes as well but only in few cases. Today I am going to discuss the No portion.
Why one should not create a new company in Tally in New Financial Year.
As the new financial year arrives people try to enter the new date of the new financial year i.e. 1/04/19 in this year case and it is not accepted in Tally. Why this happens? Because their current work period is 1/4/18 to 31/3/19. So Tally throws an error stating “Date cannot be above the current period” (see the screen shot)
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| Error Message usually seen on New Financial Year |
Just after getting this message most people starts thinking that they should create a new company in Tally in new financial year as Financial year has ended and Tally is not allowing them to work in this company.
So they create a separate company with financial year beginning from 1/4/19, which should not be done. Why it should not be done ? What is the solution?
Lets discuss the solution first. In the main screen of Tally which is Gateway of Tally just Press Alt+F2 and change the period to 1/4/2019 to 31/3/2020. That’s all which is needed. Start entering your new year’s transactions.
Now comes the part why it should not be done.
Ledger Masters
1. You have to create all the ledgers once again which would be unnecessary work for you. If the ledgers are too much then work is also bigger for you, although you can export the ledgers and then import in the new company.
Item Masters
2. You have to create all the items and units once again. It would be hard if item masters are too much and they are already defined. Although you can export all the items and then import in new company.
Previous Balances
3. You would loose all the previous balances of the parties in the new company.
Opening Stock
4. You would loose all the stock information which you have to reenter in the new company.
Company Configuration
5. You have to do all the F11 configurations again.
Final Balances
6. If you create a new company you have to enter opening balances of the ledgers which you would not have until the balance sheet for last year is finalized.
Back dated Entries
7. If you have to enter back dated entries then you have to open the old company and then do it.
Conclusion
So the moral of the story is don’t create a new company in Tally in New Financial Year, just Press Alt+F2 and extend the current financial period to new one and continue working in the existing company. In what case you can create a new company? We would discuss it in coming articles.