Recieving payment on behalf of our incorporated business into personal paypal account
I live in Canada. I have been working as an independent consultant for a US company since Sept, 2017. They have been paying me into my Paypal account. My wife incorporated a business this year. In May, 2018, I became director of this business. Is it possible to consider my income from this independent consultancy (from May 2018) as the income of our business? If so, can I continue to receive payment in my name and then transfer it to our business?
Note:
1. we do not need this money right now. Our plan is to take the money out from the company as dividend during the years when we have low or no income, as this gives us some tax benefits.
I thought of receiving the payment from the US company I am working for into our business account. But now they do not allow me to change the payment information.
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There are a few interested parties here:
The client - they just need payment instructions. They probably don’t care whether it is a personal account, joint account with your family, business account, or something else. What they want is a receipt that says they’ve made the payment. However, if they are concerned about fraud issues and the like, they might insist that the account name matches the invoice.
The tax office - they want to know what each entity has earned. If the money was earned by you personally, they don’t care that you’ve put the money somewhere else. You just have to pay your tax on what you earned. They might want tax for what looks like uninvoiced income received by your company, however.
It’s best to receive payments in an account that has the same name as your invoice.
If you want the money to go into your company, arrange to have the company invoice them. I don’t know about Canada, but in Australia, contracting an individual can be more messy than contracting a company, so your clients might actually prefer the invoice to come from a company.
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