Posts by Brenda Chase3

I have a question for my fellow bookkeeping service owners out there: regarding the data submission for business premises and similar details, are you submitting this information for every client listed on your digital certificate (since most of our services already hold power of attorney for the IRS), or are you leaving it up to the clients to handle it themselves? How have you structured your workflow or what is your long-term strategy here? Also, are you planning to charge an additional fee for handling this specific task? I’m hearing all sorts of different approaches from people, so I want to make sure I figure out the best way to handle this ahead of time.

Thomas Diaz8 said:Thanks for the response. But I suppose I should ask—can I deduct the entire expense from my account immediately, or does that also have to be "amortized" over time?

The prepayment is applied all at once.

Larry Edwards3 said:I was looking at my tax portal earlier and noticed that several sales tax forms are still listed as being processed, even though they were supposedly finalized quite some time ago... I wonder if this is just a normal part of the system's lag?
How has your experience been with the processing times lately?

You just need to click "refresh status" on the right side of the screen, and then it should correctly display that they've been processed.

quietpilot23 said:Hey, I’m listed as a director for my own LLC for just an hour a day, but business is dead and I’m starting a job at a new company.

What paperwork do I need to hand over to the new employer? A tax card, a Medicare printout showing my work history, recent pay stubs, my ID... what else is out there?

By "what else," I mean do I even need to give them any info regarding my own company?
Do I have to do anything special to register myself, or do I just go through the usual employee onboarding process like everyone else?

Thanks.

If you're going to be working 8 hours a day at the new place, you'll first need to de-register yourself from your own LLC; once that's done, your new employer will simply register you just like any other employee. However, if you decide to stay registered at your own firm for that one hour a day, the new employer can only register you for 7 hours a day (part-time).
You just give the new employer whatever they ask for—standard stuff includes your Social Security info, routing and account numbers, ID, and your previous work history records.

When we’re uploading attachments—like meeting minutes or official decisions—to the IRS portal via our electronic filing system, what are the current requirements for those scans? Specifically, do they need to show both an official corporate seal and a signature from an authorized officer, or is just the signature enough? In the past, we’d just upload the PDF files without worrying about every single page being stamped, so I'm trying to figure out if the stamp is now mandatory alongside the signature. To be honest, I’ve had a couple of clients forget to include the corporate seal even after signing, and I’m feeling a bit unsure if their submissions will get flagged because the stamp is missing.

Paul Carter40 said:Hey there, I have a quick question about sales tax.
So, my small business is registered for sales tax. We're looking at picking up some equipment from a supplier over in Canada—let's say it's worth roughly $3.25.
I was wondering how the tax situation works here—do we pay their local tax, or is it more about how we handle the US sales tax on the purchase? Thanks!

A small business needs to have a valid Sales Tax ID, which you obtain through the IRS. When you travel to Canada, you simply provide that Sales Tax ID to the supplier, and they will issue an invoice using the reverse charge mechanism. You would then record the acquisition of goods from the European Union; to do this, you take the Euro amount on the invoice and multiply it by the average exchange rate set by the Federal Reserve on the date of the invoice to establish your cost basis. Our local sales tax is applied to that amount, functioning as both an input credit and a liability. This gets documented in your sales tax forms as well as the standard reporting filings. There is quite a bit of detail explained in the existing thread regarding the European Union, so I suggest browsing through those specifics.

In the event that the machine was purchased without providing a Sales Tax ID, the Canadian suppliers will just charge their own local sales tax. In that scenario, you pay the full invoice including their tax. While you can still record the purchase normally, you won't be able to claim any tax credits or report it anywhere else.

Keith Martinez5 said:I feel like I’ve seen this discussed on this forum before, but I can’t seem to track down the thread—so if anyone could walk me through this, I’d really appreciate it! It’s about how to properly record credit card payments. For example, if I have an invoice from $33, the amount that actually hits my bank account is always a bit lower because of the processing fees. How do you all handle the closing entries for that? I think because of how I’ve been handling things up until now, my bank statement totals aren't quite squaring up with my sales records. What’s the "correct" way to book this so everything balances out perfectly? Thanks in advance for the help!
I’m not a professional accountant—just a small business owner trying to navigate these murky bookkeeping waters on my own, though having your collective wisdom helps immensely...

The easiest way is to record the net amount—whatever actually landed in your checking account—as your revenue. However, since that amount already has the fee subtracted, you should also record the processing fee itself as an expense. Think of it like a built-in compensation. By doing this, your income reflects the true net sale, and your expenses will show the exact amount taken by the processor. This keeps everything balanced: your bank deposits match your recorded receipts, and your fees are properly accounted for in your outgoing costs.

Michael Kern56 said:I had one compensation payment hit my account this year, which is now showing up in my bank statements and creating a discrepancy between my tax filings and my actual cash flow. How should I handle this? Should I just add a note at the bottom of the filing to explain the gap?

Don't record those through your bank account; instead, treat them as an in-kind transaction. It’s much more accurate to book compensations as both an income and an expense in kind.

Peter Young5 said:I gave the IRS a call today—just to be absolutely certain—and they informed me that any funds received as loans should be logged under section V.2.1., while actual loans themselves go under 2.4., and interest payments fall under "other."

The sum of sections II.2. and V.2. needs to match your total bank account turnover exactly.

That’s exactly how I handled it too. If you were to include those un-deposited receipts, the math wouldn't square with the total bank turnover at all. You have to report the deposited receipts specifically because, normally, we'd just book those as cash receipts, but the IRS needs to see exactly how much of that cash actually hit the bank account.

Peter Young5 said:I’m running into a bit of a headache with my sales tax filings for February and March of 2016—essentially, looking back at the end of the year, I’ve realized the totals don't match what was actually submitted to the IRS due to some mid-year adjustments. Is it better to just adjust the December filing—either increasing or decreasing the amount—to account for those discrepancies from earlier in the year?

In the past, I would have always filed amended returns for each individual month, which feels like the most precise way to handle it—but let's be honest, when you're dealing with corrections spanning several months, it becomes a massive chore for me and a total nuisance for the agent at the local tax office...

That's actually exactly why the IRS suggested that once they eliminated those specific error-correction forms, everything should be reconciled in the final December 2016 filing. So, not only is it the smarter move now, it's essentially required to nullify those differences in the last tax return of the year if you didn't catch them sooner. My advice? Just make the correction and file it. It’ll save you a lot of trouble, ensure your 2016 books are perfectly squared away, and give you total peace of mind.

neonsurfer13 said:But that December form was probably processed ages ago. You really think I can just go in and change it like that?
And how exactly am I supposed to do that on the form? How do I actually correct the amount? Do I just subtract it from the totals in II1 and III1 (since the invoice is from a company outside the US), or is there some other way to handle it?

Look, since this pertains to the 2016 tax year, the correction really needs to be reflected within 2016 as well. Think of it like balancing a ledger; the cleanest way is to simply file a revised 12/2016 form with those incorrect amounts adjusted downward. Once you resubmit it for processing, just reach out to the IRS agent and let them know you spotted an error so they can pull the updated version. I realize the original 12/2016 filing is already finalized, but following this path is by far the most accurate way to fix the books.

Matthew Bishop4 said:Thanks for the help.
Just making sure I've got this straight.
For 2016, I should enter the depreciation amount under "in-kind expenses" in the P-PPI, put the older depreciation under "write-off expenses," and then from next year onward, everything goes under write-off expenses.
Thanks.

Personally, I’ve always just categorized the total depreciation as non-cash expenses—both the old stuff and the new. I haven't really touched the write-off section, so if anyone else on the forum wants to weigh in on whether that specific category is intended for depreciation, I'd love to hear it. To be honest, I've done it this way for years and nobody has ever flagged it; everything has always been perfectly fine. If it turns out it's more accurate to list it under write-offs, then by all means, go ahead and do that—I'm just hoping someone else can jump in here and confirm the best way to handle it.

Matthew Bishop4 said:I could use some guidance here—I’m currently handling the paperwork for my small business and I'm registered for sales tax.
Last year, I picked up a smartphone for $1198 plus sales tax.
How exactly am I supposed to record this transaction in my KPI—and how does it actually show up on the P-PPI form?
In my KPI, there’s a column labeled "expenses under Section 22, Paragraph 1, Item 5."
Meanwhile, the P-PPI has a section for "non-deductible expenses under Section 33 of the Code."
Thanks.

Don't record the entire purchase through an input invoice; instead, just record the calculated depreciation as a fringe benefit expense.
Basically, you clear the invoice if it's been paid and claim the sales tax, but you only recognize the actual expense—using the pre-tax amount as the basis for depreciation—in the amount of that year's depreciation. As of December 31, 2016.

Nancy Jones said:I’m looking for some guidance regarding section P-PPI under V.2.1. According to the explanation provided in the IRS guidelines, you're supposed to report cash receipts that weren't actually deposited into the business checking account because the owner kept some of that cash on hand to cover various expenses.
However, the actual form itself mentions "Cash Receipts" which were already reported under section II.1.
So, what am I actually supposed to enter here?
Every single cent of our total receipts for 2016 was deposited into our bank account, except for one specific cash receipt from December 31st, 2016, since we didn't keep any leftover cash on hand to pay for upcoming expenses.
Should I just list that specific receipt from December 31st under V.2.1. because it wasn't technically deposited within the 2016 calendar year, or am I meant to put the entire year's total receipts there instead?

Regarding II1, you report the revenue that pertains to 2016 and was deposited during 2016. For example, if your cash receipts totaled $100, but your actual deposits were $80, you would enter $80—essentially just what was actually deposited for that fiscal year.
Section V.2 is meant to show the difference between your total bank turnover and the receipts reported via your bank account, which includes the sum of deposits, loans, and transit items. The IRS has data on exactly how much hit your bank account; you’re reporting a smaller amount through the bank because you recorded a large portion of your income as cash. That is why you report that specific receipt—so they understand how much of the total volume was actually composed of those cash receipts. This is how I’ve always filed, and everything has always been perfectly fine.

neonsurfer13 As I have previously observed:
I would truly appreciate it if someone could take a moment to clarify a few things for me.

If someone sends me money but then pulls out of a business deal, I typically just wire that amount back to their account after a few days, labeling it either as a mistaken payment or a contract cancellation. It’s the same process if I’m the one who makes a payment and the other party returns the funds to me. From what I gather, these types of reversals shouldn't be recorded in the IRA, but they should be logged in the KPI? Is that the correct way to handle it, or are these transactions supposed to stay off the official books entirely, perhaps just being documented via a separate explanatory memo instead?

How exactly should we be recording invoices for services received from the European Union into the general ledger versus how they should be handled within the ERP system?
For instance, I made a payment using my checking account. $33 (Which, of course, is the pre-tax amount). So, would that figure... $33 I’ve been staring at this tax filing form for a while now, trying to wrap my head around how to input these figures correctly. Specifically, when I'm filling out the section for sales, should I be entering the net amount under "base amount" and then the total including sales tax under "account amount with tax"? Or is the intended workflow to enter the gross amount as the base, manually calculate what the tax would be, and then put that calculated total into the "account amount with tax" field so I can eventually claim the credit? Mathematically, if I'm not mistaken, both methods should ultimately lead to the exact same bottom line. However, I want to make sure I'm following the official IRS guidelines to the letter. Which approach is actually considered the correct way to handle this?

How exactly should that be structured within our key performance indicators?

I made a bit of a mess during my filings earlier this year. I ended up making an error when recording some entries in the system, which means my VAT returns for that period are now inaccurate. Essentially, I accidentally logged the exact same input invoice twice in a single month—it was a bill from an international vendor. I just caught the mistake, and now I’m trying to figure out the best way to clean this up. How should I handle this? Should I include a formal explanation within my tax return, or is there a better way to fix the actual bookkeeping? Specifically, do I need to file an amended VAT return to offset the double entry, and if so, what is the proper procedure to balance everything out?

Thanks in advance!

In that case, we’re looking at transient items. Just draft up a formal explanation for the IRS and include copies of those statements clearly showing the erroneous payment and confirming that it's strictly a refund.

When you're entering this into the system, remember that you need to convert any foreign currency using the Federal Reserve's mid-market exchange rate from the actual date on the invoice. You should enter the base amount—that is, the total before taxes—which will then be categorized as an allowable expense within your KPIs. As for the sales tax, don't include it in the main entry; it’s only recorded in the tax forms as both an input credit and a liability.

You really need to sort this out within the December 2016 sales tax filings, because that final return for the year is specifically intended for correcting any previous errors. My suggestion is to amend that last filing and resubmit it—I’m assuming you’ve already sent it in, given that the deadline was back on January 20, 2016. Once that's done, just give your contact at the IRS a quick heads-up that you've filed an amendment so they can pull the updated version into their system.

Jeremy Booth21 said:Sorry if I’m the only one totally lost here, but I really need to ask. I’ve been digging around but I can't find anyone who's dealt with this exact situation before.
Up until January 31, 2016, I was working for a company, but then I got laid off due to restructuring, and on February 1, 2016, I officially started my own small business.
Now, they’re trying to tell me that on my tax forms, I have to report not just my actual business income starting from February 1st, but also the wages I earned from my old job back in December 2015 and January 2016—even though all the taxes, social security, and withholdings were already handled by my previous employer.
Is that actually how it works? Because honestly, it feels like I'm being taxed twice on the exact same money from my old job.

Also, quick second question: what about interest income from my personal savings account (which I've had for decades)? The bank already automatically handles the taxes on that when they pay out the interest, and it has absolutely nothing to do with my business.
Does that also need to be included on the tax filing? It seems totally ridiculous to me because, again, you'd be taxing money that's already been taxed, plus that interest comes from personal funds that aren't part of my business operations.

Thanks!

You are required to enter the data from your 2016 W-2 provided by your former employer, but please rest assured that you won't be double-taxed since the taxes and withholdings on that portion have already been settled. That is precisely why the tax form includes a specific section where you can list exactly how much tax and withholding was already paid.

As for your private savings, there is no need to include that.

Oh man, I tell you!

I usually just ignore those automated notification messages, but as long as everyone else made the cut, I’m clearing this whole mess off my desk. 👏

Brandon Jackson4 said:1. Does anyone know if we need to file the OPZ STAT—that statistical report for overdue receivables—this year? I submitted it last year, but there were rumors they might scrap it... No one on the forums seems to be mentioning it lately.

2. Back in 2016, I took out a loan from myself. Where does that actually land on the PPI form?

Does it go under V 2.3 (loan proceeds), or should it be in V 2.5 (other non-taxable receipts)?

Thanks for the help...

1. From what I understand, the deadline was February 20th. I got mine in on time, and everything went through without a hitch.
2. Up until now, I've just been categorizing those funds as "miscellaneous," and I've never had an IRS agent or auditor flag it as an error. My process is pretty straightforward: I just attach a copy of the bank statement showing the transfer was a loan, add a brief explanation, and call it a day.

"We are currently working on resolving several bugs identified during the submission process for DI forms. A new version of the IRS application, which includes all necessary patches and fixes, is scheduled to go live tomorrow, February 23, 2017.

We appreciate your patience while we finalize these updates."

Jessica Gonzalez30 said:It's been the standard rule for quite some time now: income from self-employment is the primary type of revenue that absolutely has to be listed on the tax forms. If you start including other types of income there, then suddenly you're obligated to report every single penny you receive.

I really think we should avoid any more confusion regarding what actually belongs on the forms and what doesn't 😉

That's true, thanks for clarifying. 👍
To be honest, I haven't actually dealt with a situation where a small business owner pulled profit out of their own firm—where they're both the founder and the authorized manager—so I was just guessing. I had this vague memory of some tax code changes happening back in 2012 regarding this specific issue, but who can actually keep track of all those shifting regulations? That's why I rely on you all as my backup.🙂