I was previously running a business together with a partner, but we’ve decided to stop working together. I’m now in the process of starting a new business as a sole proprietor.
We will split the remaining funds from the old business 50/50. My former business partner will send my half of the remaining balance (as of a set date at the end of the year) after I’ve already established my new sole proprietorship, and the money will be transferred into the new business’s bank account.
My question is:
For tax purposes in Japan, how should I classify this money when it arrives in the new business account?
Is it considered business income? Capital/owner’s equity? A transfer of assets? Something else?
And if anyone knows what this type of transaction would typically be called or registered as in Japanese accounting terminology, that would also be really helpful!
I want to make sure I record it correctly when filing taxes. Thanks in advance!
by ShiningSeraph