Posts by electricscout11

Hey everyone!

I’ve got a question regarding sole proprietorships—specifically how the accounting works. What happens to the cash sitting in my business checking account at the end of the year? For instance, if I have $6.75 left over and I don't plan on withdrawing it before the year wraps up, does that money count as profit for the following year? If I start January with a balance of $6.75, am I essentially being taxed on that carryover as new income?

Also, what's the protocol when a client pays in cash? Say I issue an invoice and they hand me the money directly. Am I supposed to just take that cash down to the bank and deposit it straight into the business account?

Hey everyone!

I’ve got a question regarding sole proprietorships—specifically how the tax side of things works. What happens to the cash sitting in my business account at the end of the year? For instance, if I have $6.75 left over and I don't plan on withdrawing it before the year wraps up, does that amount count as taxable profit for the following year? Basically, if I start January with a balance of $6.75, am I being taxed on that existing cash as if it were new income for the new year?

Also, what's the standard procedure when a client pays in cash? Say I issue an invoice, they hand me the cash directly, and then I take it down to the bank to deposit it into my business account. Is that the right way to handle it?