Accounting for Sole Proprietors: Tax & Bookkeeping Tips

Henry Edwards33 said:I can't say for sure, but my gut tells me we won't see anything until mid-March. Why?

Look, this is just standard end-of-quarter closing stuff. I’ve also got some outstanding issues with the IRS that I need to sort out first.
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I'm asking because of the down payments... but since he isn't closing until this year, whatever he pays should count toward his CDC filings.

They have to stop billing him once he de-registers his business—and they can't start charging for the new one until the first year passes, if I recall correctly... though you should probably double-check that. I didn't deal with it all in the same year myself—my old business closed on December 31st and the new one opened just a few days into the next year.

Tip Opis
Information alert: Your depreciation amount needs to match the purchase value multiplied by the depreciation rate, divided by 100—just following the standard guidelines under Section 35.2, item 8 of the Internal Revenue Code. Check line 5.
Also, just a heads-up that the closing balances from columns 4 and 9 should be carried over as the opening balances in columns 4 and 5 of next year's fixed asset schedule.
So, this message popped up while I was trying to file my tax forms. I went ahead and submitted everything anyway—just pushed through! To all the seasoned accountants out there—what’s your take on this? Is it actually okay to leave it as is, or am I asking for trouble?

Keith Martinez5 said:Tip Opis
Information alert: Your depreciation amount needs to match the purchase value multiplied by the depreciation rate, divided by 100—just following the standard guidelines under Section 35.2, item 8 of the Internal Revenue Code. Check line 5.
Also, just a heads-up that the closing balances from columns 4 and 9 should be carried over as the opening balances in columns 4 and 5 of next year's fixed asset schedule.
So, this message popped up while I was trying to file my tax forms. I went ahead and submitted everything anyway—just pushed through! To all the seasoned accountants out there—what’s your take on this? Is it actually okay to leave it as is, or am I asking for trouble?

I literally just mentioned in the chat that after waiting a few days 🙂 for them to fix it, I finally lost my mind yesterday and just hit submit despite the error message.
If they flag it, I'll just file an amendment—it's certainly not my first rodeo. ☕

Well, I just hit send on my filing, so now we play the waiting game. I actually lowered my depreciation rates for one of the fiscal years—kind of like adjusting how fast a fleet of Ford F-150s loses value on the books—so I’m guessing that might be why the numbers aren't lining up perfectly...

Which specific health insurance contributions are meant to be included when I'm calculating the deduction on my tax return? Are we talking about the standard monthly premiums for small business owners?

Do I need to report every single bit of income—savings interest, dividends, rental income—on the main tax form? And does all of that need to be reflected in the KPI, or just the primary return?

Regarding the PPI, in sections 2.1 through 2.6, am I supposed to list every single deposit that isn't subject to taxation? For instance, if there isn't a $167 formal letter attached to section 2.1, would a $3333 personal loan fall under section 2.4?

Thanks 🙂

Henry Edwards33 said:Yeah, everyone's just waiting until the end of February.

Wait, the forestry forms are due by the end of February? I read in the manual that it's due by April 30th, just like every other year.

Arthur Bishop6 said:Wait, the forestry forms are due by the end of February? I read in the manual that it's due by April 30th, just like every other year.

You're absolutely right—the forestry paperwork isn't due until the end of April.

Peter Young5 said:Which specific health insurance contributions are meant to be included when I'm calculating the deduction on my tax return? Are we talking about the standard monthly premiums for small business owners?

Do I need to report every single bit of income—savings interest, dividends, rental income—on the main tax form? And does all of that need to be reflected in the KPI, or just the primary return?

Regarding the PPI, in sections 2.1 through 2.6, am I supposed to list every single deposit that isn't subject to taxation? For instance, if there isn't a $167 formal letter attached to section 2.1, would a $3333 personal loan fall under section 2.4?

Thanks 🙂

1. They aren't the standard monthly premiums, though I'm honestly drawing a blank on exactly which ones qualify right now. 🙄
2. It depends on whether they are subject to sales tax; if they are, then property income has to be reported to the IRS, and I'd assume capital gains work the same way—though I'm not an expert, so don't hold me to that.
3. Yes.

Can someone please tell me if I handled this tax liability transfer correctly? In my IBM software, when I enter the amount, it records both the base and the sales tax as negative values.
So, I entered $6,387.50 as the total including tax under code 6, then put $6,387.50 under code 7 for domestic transfers. Then, under code 20, the program automatically generated -$3,100 for the base and -$775.00 for the tax under code 22. Does that sound right to you guys?

So, I’m staring at this CDC form and my brain is basically melting—regarding the tax and surtax payments—should I be listing the stuff actually paid during 2016, or am I talking about those advance payments made for 2016 (you know, the ones wrapped up by January 31st, 2017) that specifically cover the December 2016 period?

thanks

graniterider10 said:Can someone please tell me if I handled this tax liability transfer correctly? In my IBM software, when I enter the amount, it records both the base and the sales tax as negative values.
So, I entered $6,387.50 as the total including tax under code 6, then put $6,387.50 under code 7 for domestic transfers. Then, under code 20, the program automatically generated -$3,100 for the base and -$775.00 for the tax under code 22. Does that sound right to you guys?

Look, when you’re issuing an outbound invoice involving a tax liability transfer, the invoice itself should show the pre-tax amount marked specifically for that transfer. So, when you're logging that into the IRS system within Silicon Valley, the entry under 76ers foreign transfer needs to match that pre-tax figure—which, in your specific case, would be $310.00. The sales tax shouldn't be listed there at all. If you ever have to void the IRS filing, just follow the same logic, only using negative numbers.

Olivia Cruz86 said:So, I’m staring at this CDC form and my brain is basically melting—regarding the tax and surtax payments—should I be listing the stuff actually paid during 2016, or am I talking about those advance payments made for 2016 (you know, the ones wrapped up by January 31st, 2017) that specifically cover the December 2016 period?

thanks

I just put in what was actually paid in 2016. I don't include any 2017 payments, even if they're meant for December 2016.

placidlynx92, thanks for the reply. I’ll give that a shot.

I’ve got another question, though. Regarding the DI form—whether I try uploading the file directly from my software or manually typing everything into the e-filing portal, I keep getting this error: DATA ERRORS IN FORM—this version of the form can no longer be submitted. It says I need to use the 2016 version.

But how on earth am I supposed to find that 2016 version?????

Just one more follow-up regarding the PO transfer. It looks fine over at the IRS, but how am I supposed to record this in the KPI? What figure should I be using? If I enter 310, the system automatically calculates sales tax, which is definitely not what I'm looking for here.

Alright, it's sorted. I managed to get everything set up correctly.
The only thing left hanging is that question about the Form 1099.
🙂

graniterider10 said:placidlynx92, thanks for the reply. I’ll give that a shot.

I’ve got another question, though. Regarding the DI form—whether I try uploading the file directly from my software or manually typing everything into the e-filing portal, I keep getting this error: DATA ERRORS IN FORM—this version of the form can no longer be submitted. It says I need to use the 2016 version.

But how on earth am I supposed to find that 2016 version?????

Well, you might just have to use the 2015 version. I've had to manually input several DI forms myself—and let me tell you, I wasn't using last year's data, I was fixing it all from scratch!—and I never ran into that specific error.🤔

Message on the tax reform portal😉

"Fixing bugs in the DI forms

We’re currently working on resolving the errors popping up when submitting DI forms. We expect to push an updated version of the tax reform application to production tomorrow, February 21, 2017, which should include these bug fixes."

I’m looking at an independent insurance broker who operates with just one employee and still handles all their reporting via physical paperwork. They don't even have an electronic filing system set up.
The folks over at Hanf are claiming that all reports should be submitted electronically. I'm curious, how are you all handling your filings with Hanf?

Henry Edwards33 said:Message on the tax reform portal😉

"Fixing bugs in the DI forms

We’re currently working on resolving the errors popping up when submitting DI forms. We expect to push an updated version of the tax reform application to production tomorrow, February 21, 2017, which should include these bug fixes."

Thanks, Liti P. ostati. I've actually got two error-free DI forms sitting right here, and I've been banging my head against the wall trying to submit them since Friday. 🤣

Has anyone here gone through the process of filing their residency fees using the KPI system before?🕺

Olivia Cruz86 said:So, I’m staring at this CDC form and my brain is basically melting—regarding the tax and surtax payments—should I be listing the stuff actually paid during 2016, or am I talking about those advance payments made for 2016 (you know, the ones wrapped up by January 31st, 2017) that specifically cover the December 2016 period?

thanks

I include them for 12/2016, because the IRS also charges those prepayments against the December 2016 liability.