Income from freelance account to company account

Income from freelance account to company account

We are an Indian-based company that initially operated as freelancers on Upwork. Upwork does not have a physical presence in India. Between 2009 and 2017, there were two of us working as freelancers. Subsequently, we made the decision to establish our own company. In 2018, we officially founded our company in India. From that point onwards, all remittances from our freelance accounts were directed into our company's bank account, and we ceased withdrawing funds to our personal accounts.

The transaction history on Upwork can serve as evidence of this practice. We possess Foreign Inward Remittance Certificate (FIRC) documentation for all these transactions. Additionally, we have linked our company's Permanent Account Number (PAN) to both of our freelancer accounts. This ensures that any funds received in our individual freelancer accounts are accurately reflected in the quarterly TDS filings of our company account. We use our company account to issue employee salaries, and currently, our company employs only three individuals.

To summarize, any income obtained through freelancing individual accounts is promptly transferred to our company account, and all financial transactions are conducted through this account. We have diligently filed and paid our Income Tax (IT) for all applicable years. Moreover, we have paid the Goods and Services Tax (GST) on any purchases that require it, and our financial records remain clear.

At present, we seek guidance on whether there are any potential issues or precautions we should take to avoid any future complications so we do not have issues with GST or IT.

Asked 7 months ago in GST

- Amount received from the upwork should be credited directly into the bank account of the company instead of bank accounts of the individuals

- Transfer from shareholder cum director individual accounts is considered as either loan or capital in the books of the company. It can not be treated as turnover of the company. To show turnover in the books of company, then there should be some kind of arrangement between the company and the individuals

- In the scenario mentioned in the question, turnover of the Co. would not be treated as export sales and liable to pay GST. Also assuming FIRC is containing details of individual beneficiaries

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Vivek Kumar Arora

CA, Delhi

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Hi Rohit,

Thanks for your quick response. 

-The amount is directly deposited to company account no individuals accounts are involved. So its a direct upwork to company account transfer.
-The FIRC has name of company and company bank details no individuals accounts are involved.

This is happening since we started the company, no individual account name or transaction is involved in any means. All deposits are between upwork and company account ONLY. 

Please let us know if we need to make any updates.

Asked 7 months ago

- For companies it is mandatory to maintain books of accounts under the Companies Act 2013. Maintain books of accounts accurately and do filings with the ROC timely

- Under GST, raise proper invoices to overseas clients in a proper tax invoice format. Apply LUT to export without payment of taxes. Sale consideration should be received in convertible foreign currency other than INR. Consider the exchange rate properly at the time of filing of GST returns. Pay IGST on import of services. You can claim refund of ITC on business expenses

- Under Income tax, pay the advance tax if applicable. Deduct TDS on expenses if applicable. File TDS returns regularly.

Vivek Kumar Arora

CA, Delhi

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Rakesh Jain

CA, Mumbai

9 Answers

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As you mentioned that you have separated everything as a company and individual.
Just be clear that your FIRC contain company name only.

You are all good to go, if you consistently follow all these things in the future also.

Neeru Aggarwal

CA, Ahmedaba

7 Answers

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Talk to Neeru Aggarwal

Document Agreements: Make sure to have clear written agreements or contracts between the company and the individuals who are also shareholders or directors. GST Compliance:
- Maintain detailed records of all GST transactions and ensure that invoices are raised in accordance with GST regulations.
- Monitor changes in GST laws and regulations to stay updated on any amendments or updates that may affect your business.

Income Tax Compliance:Continue to diligently file your IT returns and pay any applicable income taxes on time. Consider consulting with a tax professional to ensure accurate tax calculations and compliance.

Regular Compliance Audits: Periodically conduct internal audits to ensure compliance with GST, IT, and other relevant laws and regulations.

Maintain Proper Accounting: Ensure that you maintain accurate and up-to-date books of accounts as required under the Companies Act 2013. Proper accounting is crucial for compliance and to provide transparency to stakeholders.

By taking these precautions and staying proactive in your compliance efforts, you can minimize the risk of future complications with GST and IT, and continue to operate your business smoothly and legally.

Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.

Thank you.

Shubham Goyal