My husband had only been doing odd jobs in his spare time for the first part of the year and was not going to earn anywhere near the threshold of $30,000 earned before charging GST. We had cancelled the GST account and had not been charging his customers GST.

Now he has been ofered a years contract to work in Russia but is to be paid by a Canadian company. In the next months to the end of this year he will now earn over $30,000. I am assuming we will now have to charge this company GST and re-open our account. What about the previous invoices I have done, are these ok still?

On a similar thread, might I also ask this, on past invoices he has charged for his time and also charged for expenses which the company he did the work for paid in full. I stupidly entered the whole amount Labour and expenses under an Income account as it was not an expense to the company as it was paid for by the third party. Now I am begining to doubt my self as I now realise he will pay Income tax on his expenses and I am wondering if this is right? Please can some-one clarify this for me and suggest an account to put these expenses too. I can use the ones I already have set up but I don't understand how to recieve the money for the invoice and get it to clear the expenses?

Thanks, and remember to keep it simple, I am a new simply accounting user as you will no doubt be able to tell!

Anne

Hi there: I'm not sure what you will need to do about the first half of the year not charging the GST. I think this is one of those times where you should probably phone the GST people and explain the situation and ask them what to do about it. It would be a little hard to go back and ask for the GST on all your previous invoices, but I would ask them and get a ruling from them, if it was me.

As for the "expenses" that you charged for and were paid for, again, I'm not sure because you say the expenses were actually paid for by the third party and not your husband.  If your husband didn't pay for any expenses how come he was able to charge back for them?   If he had paid out his own money on expenses related to a job, then he would of course be able to charge back for them.  And if that was the case, you would be expensing all the costs to expense accounts and it would be perfectly OK to then put the "income" charged to recover those expense costs to the income account.  (Because the deduction would happen via the amounts being put to the expense accounts as they were incurred by your husband.)  The income and expenses would "wash", so to speak.

So, I am a little confused as to why your husband even invoiced for the expenses if he didn't actually incur them.   Please explain further on this and a more correct or helpful answer can be given.     Rita Deering

 Sorry I have confused you and my self.

He paid for the expenses himself out of his own pocket. In the past he has paid his own expenses but this last few times the company he worked for paid for every thing. When I entered the Invoice into Simply I put everthing under the same account. I think I should not have?

I will as you suggest ring for a ruling on the GST.

Thanks

 Just to let you and others know, I contacted the GST department and was told that when I re-register only Invoices after that date will be subjuct to GST, I don't have to worry about the previous ones, even though the years total will be over $30,000.

They also told me if all the work is done in Russia that I do not need to charge GST even though he is being paid by a Canadian Company. That was different to what the accountant told me!

 What is the best way to correct my earlier errors?

For an example, lets say I entered an invoice for say $1000 as sales but $100 of that was for a hotel bill he paid. The company sent a cheque for $1000 which I received payment on.

If I just go back into the original invoice and change the $100 to an expense it leaves a figure of -$100 in the expenses. Do I have to enter the expense as a journal entry as well ? $100 to Expense $100 to Owners Contribution? That clears the expense to zero but is this leaving an incorrect figure in the owners Contribution? this is what I am not understanding. Please can some one go through the steps and explain why it's done in such a way, to help me understand the process that I am obviously not following now?

If I can understand how to do a new entry it would help me fix the ones I have done wrong I am sorry if this does not make a lot of sense but because I am not sure of what I am doing I also don't always know how to ask the question!

Thanks