Entrepreneurship & Small Business

Dealing business after incorporation, what changes ?

  • Last Updated:
  • Apr 25th, 2018 4:29 pm
[OP]
Jr. Member
Jan 8, 2015
128 posts
56 upvotes
York, ON

Dealing business after incorporation, what changes ?

Hey guys,

I just became incorporated. When we take up contracts for work we will be using the corporation name instead of the individual name (myself). My question is do we now have to provide a bill to the client as a corporation and have the client pay off that bill ? I am guessing we need to do something to record our business for tax filing in the future but what kind of documentation would be acceptable for these things ?

FYI, we will be dealing with <30k a year so no tax account is required or setup.
2 replies
Deal Addict
Jul 3, 2017
3684 posts
2546 upvotes
The purpose of incorporation is that the company becomes a separate legal entity that earns and retains income and pays taxes on it independently from you.

You need to issue an invoice in the name of the company to any client you are expecting to pay you. If you are required to register for HST/GST, you will charge that on the invoice as appropriate.

The sum total of your invoices should be your sales revenue for the year. To that you will add other revenue (e.g., interest income on your company bank account). Then you will deduct expenses, and you will pay income tax on the resulting profits.

At year end you will have to decide the fate of any unpaid invoices that are looking doubtful. If you haven't been paid, but you expect to be paid, it's revenue in the year in which you issued the invoice, and any collection costs are a separate expense. You can cancel the invoice if you don't expect to be paid. You can re-issue it again later if things change, in which case it becomes revenue in the year you re-issue it. You are required to pay HST/GST to the CRA on invoices issued in the reporting period, regardless of whether or not you have been paid by the customer (a little bit of an unfair burden on small business).
[OP]
Jr. Member
Jan 8, 2015
128 posts
56 upvotes
York, ON
This perfectly cleared things up for me. Thank you so much Exp315.

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