Accounting for Sole Proprietors: Tax & Bookkeeping Tips

How many days of leave is an employee actually entitled to for their wedding? And more importantly, how am I supposed to show this on the payroll? It’s not exactly standard PTO... how is this usually handled in the books?

If I’m not using an OA for business purposes, does the vehicle expense split 70/30, or is the entire cost considered non-deductible?

Peter Young5 said:If I’m not using an OA for business purposes, does the vehicle expense split 70/30, or is the entire cost considered non-deductible?

Fringe benefits

graniterider10 said:Yeah, honestly, doing it on January 1st is probably the best way to go. That's exactly how I handled transitioning my mom's business over to my name. The whole process is a massive headache. You have to execute a full transfer of the business entity and get everything notarized. If you want the nitty-gritty details, I can walk you through it. Even if the employer identification number stays the same, since the business is tied to a specific individual, a new owner means a brand-new EIN... so basically, everything is new. New certificates, everything. Even though the bank account might stay the same, you still have to update all the registration data. It's a total reset because, at the end of the day, it really is a brand-new business.

Notarize it? What does that actually entail? Why isn't this just filed directly with the IRS or the Secretary of State's office where they issue the official rulings?

casualorca5 :

I've got my personal car listed under my small business expenses. How does the depreciation math actually work here, and what’s the maximum percentage I can legally claim if I don't keep strict logs—like actual mileage or trip receipts? Right now, I'm just recording it as a 70/30 split between business and personal use... :S

Nicole Lee6 said:Notarize it? What does that actually entail? Why isn't this just filed directly with the IRS or the Secretary of State's office where they issue the official rulings?

You go to a notary to handle the transfer of the business entity, and then you submit a copy to the IRS so they can see exactly what assets the new small business owner is taking over, including🙏liabilities, outstanding debts... I need to dig through my paperwork to see exactly how it's worded, then I'll get back to you.
The registration for the business goes through the local Chamber of Commerce..

Peter Young5 said:casualorca5 :

I've got my personal car listed under my small business expenses. How does the depreciation math actually work here, and what’s the maximum percentage I can legally claim if I don't keep strict logs—like actual mileage or trip receipts? Right now, I'm just recording it as a 70/30 split between business and personal use... :S

70/30... well, it's the same deal with depreciation; that other 30% isn't tax-deductible.

Regarding my membership fees for the tourism board, I’ve ended up with $0.47 some interest charges... How should I be booking those? Is it okay to list them as expenses outside of the KPI? (Sinesys)
Thanks!

graniterider10 said:You go to a notary to handle the transfer of the business entity, and then you submit a copy to the IRS so they can see exactly what assets the new small business owner is taking over, including🙏liabilities, outstanding debts... I need to dig through my paperwork to see exactly how it's worded, then I'll get back to you.
The registration for the business goes through the local Chamber of Commerce..

That works, sounds good. We can just move this over to DMs so we don't clutter up the main thread.😁

Keith Martinez5 said:Regarding my membership fees for the tourism board, I’ve ended up with $0.47 some interest charges... How should I be booking those? Is it okay to list them as expenses outside of the KPI? (Sinesys)
Thanks!

👍

Nicole Lee6 said:That works, sounds good. We can just move this over to DMs so we don't clutter up the main thread.😁

Clutter? Please. Any insight regarding our federal bureaucracy is gold—let's hear it all. 👏

placidlynx92 said:👍

Thanks, lady G

Look, just so everyone can see this whole business transfer agreement... maybe it'll actually be useful for once.🙂

Transferor, address, Tax ID
and
Acquirer, address, Tax ID
in, date____________
enter into
BUSINESS TRANSFER AGREEMENT

Under the Small Business Act, transferring a sole proprietorship to immediate family members in a direct line is permitted when the owner exercises their right to retirement benefits—which is exactly what’s happening here between the aforementioned Transferor and Acquirer.
1.
By way of this agreement, the Transferor transfers all obligations and receivables arising from the operations of (business name), Tax ID, as well as all employment contracts for the employees currently working for the Transferor's business.

Sorry, I have to post this in chunks because my computer keeps shutting down on me.😢

The existing business checking account, which was opened at Chase Bank (account number XXXX), will remain the Acquirer's business account. This means that starting January 1st, all receivables and liabilities originally held by the Transferor automatically become the responsibilities of the Acquirer—including all income and expenses.

The specific liabilities the Acquirer will take on on behalf of the applicant are as follows:

1. Unpaid vendor invoices due by January 2015.
The list of unpaid invoices is attached to the transfer agreement.

2. Outstanding liabilities owed to the IRS and the Federal Budget, consisting of unpaid sole proprietor obligations totaling $_____________, as well as the sales tax liability for December 2014 in the amount of $__________________.

2.

The Transferor transfers to the Acquirer the right to use all items on the list of long-term assets, the right and obligation to calculate depreciation for used assets, and the option to exclude specific items or rights from the list of di, provided there is a valid basis for doing so.

The total acquisition value of the transferred assets is $_____________, representing a book value of $_________________ as of December 31, 2014.

3.

This agreement becomes effective on January 1, 2015.
4.

This agreement is executed in three original copies.

Transferor: ______________ Acquirer: __________________

Like I mentioned before, you need to get the Agreement notarized... make sure you have all three copies, because you'll need to take one of them to the IRS.
What else? Honestly, everything is changing. I think the only thing staying the same is the existing business checking account. Everything else is being updated to the new owner's name, and actually... you don't really gain anything from this transfer. The only thing is, maybe closing it down will be complicated... I don't know. Just make sure you don't cancel your dad's certificates right away, because you're still going to need them for a while to file forms under his SSN.

Kate Adams7 said:Yeah, that whole interest thing with income earners😁
I kept it out of the KPI, but I tucked it into the PPP with an extra note under V. one.
One of my clients actually got grilled by the IRS after filing because they dropped below the VAT threshold, but they were totally fine with how I handled this part.

It doesn't go on the sales tax form since it isn't subject to it!

So, if passive interest gets put into receipts—outside the KPI—then it won't show up in the PPPI under section V.? Is that how it works?

Olivia Cruz86 said:So, if passive interest gets put into receipts—outside the KPI—then it won't show up in the PPPI under section V.? Is that how it works?

Synesis didn't grab those for me automatically, so I just manually added them to V.2.5.,
just like any other receipts outside the KPI, since the IRS compares the money hitting your bank account against the PPPI.
For example, I did the exact same thing with a loan—manually plugged it into V.2.3

Kate Adams7 said:Synesis didn't grab those for me automatically, so I just manually added them to V.2.5.,
just like any other receipts outside the KPI, since the IRS compares the money hitting your bank account against the PPPI.
For example, I did the exact same thing with a loan—manually plugged it into V.2.3

That’s exactly why I’m asking! Since Synesis didn't grab them for me either... looks like I gotta type them in manually.
thanks

Keith Martinez5 said:Regarding my membership fees for the tourism board, I’ve ended up with $0.47 some interest charges... How should I be booking those? Is it okay to list them as expenses outside of the KPI? (Sinesys)
Thanks!

Honestly, I haven't been recording those because there wasn't a specific key to use outside of the KPI 😬 and frankly, I don't think I'm going to start now.