Signed contract as sole proprietorship - Can I bank it into my company?

[coolbutclueless]

Hi all,

I am in the process of creating my company (it should be completed this week).

At the meantime, I got an opportunity for a small 2 months contract. If my company was already created, I would have signed under the company name, but I prefered to not wait too much and sign it with my name as sole proprietorship since the company creation is not completed yet.

Once my company is officially created, when I receive my payments, can I still bank it in my business account and declare it as revenue for my company?



Edit: precision because I think I was not very clear in the original post: I am in a process of creating an incorporated entity.

 

[angietrevino0309]

@coolbutclueless You can invoice from your corp if this is what you are asking. Re-submit your writeup/contract and charge your HST. If you didn't quote HST on your original contract then eat the slight loss and make the contract price inclusive of hst.

 

[pyrhonn]

@angietrevino0309 GST and HST have nothing to do with business structure. It’s all based on revenue thresholds related to taxable revenue. It’s actually more likely that he was registered and collecting in the sole proprietorship but not immediately registered for GST in his corp. therefore could have up to $30k revenue before he is required to be a GST registrant. Corporations are not automatically registered

 

[angietrevino0309]

@pyrhonn Ok?

OP' is asking if they can charge from their corp. This ask/act makes sense if OP is seeking to not exceed that 30k amount on their sole prop/individual situation and has not done the hst registration for their sole prop structure.

I am very doubtful that OP is seeking to incorporate and anticipating less than 30k gross revenue over a rolling 12month period and seeking to not register for HST.

Their client can insist on paying OP's sole prop business which likely did not factor HST. OP's ask was 'can I charge from my corp'. My answer was yes, and suggested eating the HST that was presumably not quoted on their sole prop invoice/quote/whatever. A one-time sacrifice to shelter the income from OP's sole prop/individual tax return.

Not sure what, if anything, you are trying to correct me on because none of your points have anything to do with OP's ask or my response. OP can indeed invoice from their new corp, even if they did the work under a different organization - as long as the client agrees to pay the new entity and not the sole prop.

 

[resjudicata]

@coolbutclueless Bank it in your business. Sole proprietor and small business is the same person. It’s not like you’re incorporated. Putting your name or your business name is the same thing same entity . I’m actually now after 6 years going corporate as I make too much money come tax time. You’ll get there .

 

[coolbutclueless]

@resjudicata That is precisely the point, I am in the process of being incorporated, so it will be a different entity.

The reason why I am being incorporated is mainly because I will generate a lot of profit and hire 1 or 2 people by the end of the year (among other factors)

Edit: so basically since the Inc. is not completed yet I signed this contract as sole proprietorship but I am asking if I can bank it in my Inc. once I get my first payment even if I did not sign it with the Inc in the contract

 

[resjudicata]

@coolbutclueless Talk to your accountant. I don’t know how that works out now. Might have to just take that bill into your personal. Actually funny cause I’m in the process now and I won’t even buy materials or marketing until my Corp is fully set up so I can make sure it’s all coming from the Corp. talk to accountant

 

[coolbutclueless]

@resjudicata Yea, I will talk to accountant. Exactly my situation as well, I am planning to buy materials etc once the Inc. is created.

If you want me to share what the accountant says let me know

 

[resjudicata]

@coolbutclueless Sure. I bet he / she will just say to claim that as your personal income . Or you might be able to invoice to Corp after. For example say the job was 10,000 , now you can just sub the job out to the Corp and get it out of your hands . There will be a work around like that

 

[mttyhu]

@coolbutclueless Yes, as a Sole Proprietorship the business revenue is combined with/as your personal income when you file your taxes. The timing is irrelevant as long as it's within the same tax year.