Here’s the plan
- Have an independent corporation that can accept payments from clients, hold capital, and pay expenses (myself as a contractor and other freelancers)
- Isolate it from “me” as a Canadian taxpayer (Income shouldn’t be directly associated to my name)
- Invoice clients from the business entity
- Hold/Invest the majority until a later date (pay myself 5%)
- Pay business taxes properly
- Go unnoticed
So far it looks like the way to do this is
- Create a corporation
- Name someone I trust as the director
- Create an international bank account in the name of the business
- Set up a payment processor to deposit in to the bank account
- Keep up with accounting/regulatory paperwork
What I’ve done so far
- Hire a freelancer to create a corporation (100GBP)
- This is a UK corporation. Chosen because it was easy to find someone to incorporate in the UK.
- The director is chosen and named
- The freelancer also offered to do the required paperwork for the business for a monthly fee (20GBP). I personally like this as this means the freelancer is incentivized to make sure the setup and the paperwork are done right, so I agreed.
- Create a transfer wise account for the business ($0)
- This was also tied to the director’s name, and they had to provide Canadian passport as ID verification
- Set up Freshbooks (Free for 3 or less clients, small CC fee) ($0)
- Set up WePay (This was the wrong choice. WePay is out.) ($0)
- Accept a credit card payment in to Freshbooks (success: $10)
- Have the Director sign up for Stripe (success)
- Create a new Gmail account for the business
- Connect Stripe to Transferwise using the Borderless account with a USD balance (Success: $0)
- As Transferwise and Stripe both require 2FA, I created a Twilio number that forwards the 2FA codes to the gmail account ($5/mo for a server to precess the request, plus 4-5 hours wrangling with the Gmail API. Note: Could probably be done server less for pennies, but I had the server anyway)
The payment processor (to accept CCs)
Stripe can pay in to a “borderless” Transferwise account that has “local bank details” (available with GBP, USD, and a couple others. Not CAD)
It took 12 days for Transferwise to verify the account, minutes for Stripe to verify, and then about 2 weeks for a test payment to Stripe to show up in Transferwise.
We did have to email Transferwise as noted below in Tips, I suspect they would not have made any progress without us emailing them
Tips for anyone following in my footsteps
- Find a proxy that you trust to act as the director, and who’s name the accounts will be under. At a certain $$ threshold, this would probably be a lawyer.
- Set aside at least a month for this process, and stay on top of it (We had to email Transferwise a half-dozen times to keep their verification on-track)
- (Based on how it’s been done by other people) write up a resignation letter for the director, leave the date off, and have them sign it. Do the same for release of shares or a document detailing the transfer of ownership of the company.
Test it throughout real business use, and make sure everything goes the same as the test results!
Community input is greatly appreciated. There can still be gotchas we’re not seeing.