Posts by Brenda Chase3

rowdyhawk25 said:I could really use some help here if anyone knows the ropes. When I'm closing down my small business, should I only be reporting the bank account transactions up until the official deregistration date? Does everything after that point just get categorized as non-monetary income and expenses, or am I totally off base?

That is exactly right. Anything that didn't pass through the business checking account prior to the closing date should be recorded as non-cash items. I actually dealt with this exact scenario for a client back in 2013, and we handled it that way for the final filings—everything was processed perfectly fine by the IRS.

Anthony Jackson81 said:Hey, quick question—which accounts and codes should a small business owner use if they're trying to settle up those back taxes from 2015? Are we talking old school or the updated stuff? 😁

You should stick to the original billing notices, because all the associated debts are tied directly to those specific identifiers. As far as the actual routing numbers go, nothing has changed.

Lawrence Clark2 said:Hello everyone, I was hoping someone could provide some guidance regarding adding a partner to my small business.
Do I need to officially terminate their current employment status within the company first?
Also, how should the payroll taxes be handled—do I calculate the full contribution amount per individual on the tax filing, or is there a different way to go about it?

Think of it this way: you’ll need to draft a partnership agreement that clearly outlines the percentage of profit each person is entitled to. As for the logistics, the new partner needs to register themselves with the IRS or local tax authorities as a business owner (assuming they aren't currently employed elsewhere). In your paperwork, you have to designate one person as the primary owner; since you can't list two different Social Security numbers or EINs on the same standard forms—like your tax filings or sales tax returns—everything flows through that primary identifier. Regarding those payroll taxes, it's important to understand that they aren't split proportionally. Even if you are fifty-fifty partners, you don't just pay half each; rather, the full statutory contribution amount is calculated for every single individual involved. It's like running two separate tax obligations under one umbrella structure.
Everything else follows standard accounting procedures for income and expenses. The main thing to remember is that at the end of the year, by January 31st, you file a joint information return, and then by February 28th, each partner files their own individual return based on the specific profit percentages established in that initial joint filing.

rustytiger14 said:I’ve already knocked out the DOH form, the long-term asset list, the excise tax calculation, and the breakdown of all my business income and expenses from 2015. What else am I missing for the IRS, and how do I actually get this stuff turned in?

Should I do it through the IRS website or just head down to a local field office?

Just so we're clear, this is all for my small restaurant business.

What about the local tourism fees? If you run a hospitality business, they should be tracking those based on your industry code.

You can handle the tourist registration and the fixed asset reports via the IRS portal, but for everything else, you’ll likely need to drop them off in person.

Honestly, it’s ridiculous. They can't even comprehend why we stay on top of things. They’re so used to dragging their feet and doing everything at the absolute last minute that they assume everyone else operates with that same level of inefficiency within their own government agencies. 🤦

Brandon Jackson4 said:I’m looking for some clarification regarding the OPZ STAT filing.

I have some outstanding receivables from regular individuals—just private citizens, not business owners.
As I understand it, under US tax regulations, I’m not required to collect their Social Security numbers.

So, here’s my dilemma: what do I enter on the OPZ STAT form when I don't have an SSN, which wasn't even necessary to include on the original invoice?
I saw a post on the forum a while back where shadowdrifter99 mentioned we don't need to list an SSN on receipts for private individuals.
My question is... what should I actually input into the form?

You would just list everything related to private citizens under Section III.

Keith Martinez5 said:That actually makes sense to me, and I think I'll start doing the same thing—but wait, are you recording it as an expense in kind rather than income? To my mind, it feels a little counterintuitive to treat a bank commission—something that's effectively a cost to you—as actual income.

You actually record both the expense and the income in kind for the amount of the commission.
Think of it this way: let's say your invoice is for $33. A credit card processor pays $27 into your business checking account, but they take their commission of $6.75 first. At the exact same time, you receive an invoice from them for that $6.75 fee, which you don't actually pay out of pocket because you simply offset it against the lower amount they deposited.

You clear the IRA $27 via your bank account (since the transaction shows that specific net amount hitting your books), but you clear the $6.75 in kind because the invoice is for $33; you can't just ignore the total value of the bill.
At the same time, you close out their URU for $6.75 in kind. It’s essentially a classic offset, except instead of having a formal debit memo statement, you just book everything so that the IRA and the URU perfectly cancel each other out.

Harold White5 said:To be honest, I was previously advised that if I were to start a small business while carrying existing debt, my business checking account would likely be frozen immediately because the IRS uses the same Social Security number for both me personally and my business entity. That specific concern is actually what led me to consider forming an LLC instead.

Where exactly could I verify this information?

Your original question was: "Will I run into issues starting a sole proprietorship if my personal bank account is frozen?" and my answer was that a frozen personal account has absolutely nothing to do with starting a business. The Secretary of State won't stop you from registering a business just because you have a personal account issue.
What you're asking about now is a different matter entirely. I haven't dealt with this personally, but I recall reading somewhere that they could potentially freeze your business account if you haven't settled certain personal debts, since for a sole proprietor, there isn't really a legal distinction between personal and business funds—you're basically operating out of the same pocket. I wonder if anyone else here knows if that's how it works.

Susan Cruz48 said:Look, if we're treating card transactions like cash, it just doesn't make sense to log them as bank deposits. And even if you did go that route, the commission should be recorded right there in the bank deposits as a negative entry. Personally, I just put those amounts under cash receipts.

As for the processing fees, I book those as non-cash adjustments—similar to how one might handle a discount, since it functions quite similarly. It’s not like actual money hit our bank account, nor did we pay the fee through a separate wire transfer; instead, we simply offset the total amount received by deducting the fee upfront. Following the guidance from our financial advisor, we treat these as non-cash items. This is the method we've used for years when submitting our summaries to the IRS, and it has always been perfectly acceptable. If we didn't do this, we'd constantly be stuck explaining discrepancies between our bank statements and our reported income to tax auditors. By handling it this way, our cash deposits and our bank totals align perfectly with the merchant statements provided to the IRS.

The decision was officially reached back in 2015, though the actual goal is to see those numbers drop throughout 2016, with the law entering into force on January 1, 2016.

To makes perfect sense to me as well. If we look at how things were handled back in 2015, it follows the same pattern, especially since the documentation states the changes are law entering into force on January 1st, 2016.
Essentially, once we hit January 1st, those new rates kick in immediately; they aren't going to apply them retroactively to the previous year.

But it says the law enters into force on January 1st, 2016. Hmm...

David Mitchell4 said:I get it. You spend from the account however you please, then pray at the end of the year that you can justify most of it.

Personally, I don't find that to be a very reliable strategy. It's far too easy to end up with a pile of unjustified expenses, and a 25 or 40 percent tax rate is simply too high for a small business owner to swallow.

Look, it isn’t about whether a small business owner is physically spending money directly from their business account. They’re simply hoping they can justify whatever they can possibly pass off as a deductible expense to their accountant. But here is the reality of how it works: it doesn't matter if you leave the cash sitting in your account or if you withdraw every cent in cash. You aren't taxed on your total balance or on the specific amount you withdrew; you are taxed on the net difference between your total income and your total expenses, which constitutes your actual profit. Think of it like this: if you don't withdraw the money and just let it sit there, but you have zero business expenses to claim, you're in the exact same position as if you had withdrawn it all. Without those costs to offset the revenue, everything left over is simply treated as taxable income.
You can't exactly expect to pay peanuts when you're pulling in a massive income. Before anyone jumps into starting a business, they really need to sit down with their numbers and crunch them on paper first. It’s all about weighing the pros and cons of being a sole proprietorship versus an LLC—especially when you factor in that flat 20% tax rate. You have to run the math to see which structure actually leaves more money in your pocket.

David Mitchell4 said:What exactly do you mean by "without justification"?

Think about it this way: imagine you just withdraw cash without having to provide a receipt or an explanation for what it's for. Since any amount that isn't logged as a business expense is essentially treated as personal income, as a small business owner, you have total discretion over how you handle those funds. Anything not recorded as a deduction counts toward your earnings, and that’s what you pay taxes on. That is what I mean by "without justification." Throughout the year, every month when my revenue hits the account, I transfer money out to myself—that's my "salary," the income I actually get to spend. I record the portion used for business overhead as a legitimate deductible expense, but the rest I pull out as pure income without booking it as a cost.

Keith Martinez5 said:From what I’ve seen, it usually follows the standard tax assessment timeline—once everything is processed, you can typically request the refund within about two weeks. One little tip, though: make sure you definitely include your banking info for the direct deposit. At the local FBI office, they don't always explicitly remind you to provide that—they tend to stay buried in all their other paperwork!

That's great, thanks! 👍

John Hall52 said:Hi there.
Could someone perhaps give me a brief rundown on how the registration and deregistration process works through the online portal at the Department of Health and Human Services?
1. For the registration, do I need to submit everything eight days before the start date?
If I just complete the filing on the portal, does the information automatically sync up with Medicare?
2. And what about the deregistration process?
3. Which specific documents, such as the employment termination notice and the insurance cards, am I supposed to hand over to the employee when we part ways?
Thanks so much in advance for any help.

1. You have to register an employee before they actually begin their duties. Ideally, you’d submit the filing a day ahead of time; for instance, if they start on February 10th, you’d submit everything on February 9th. While the rules don't explicitly mandate a full day's notice, some people try to file on the very same day an employee starts an afternoon shift, but I’ve heard inspectors can be quite picky about that. It’s much safer to file a day or two beforehand if you can manage it.
When you handle the retirement contributions, the health insurance portion updates automatically with Medicare.
2. For deregistration, you should do it on the same day they stop working, or at the very latest, the following day. Just handle the retirement side; Medicare takes care of the rest automatically.
3. Along with that, you should provide them with a confirmation letter stating their exact dates of employment and their job title, plus the official deregistration paperwork.

Just one word of caution: if you haven't set up your electronic health insurance access, you won't be able to print out either the registration or the deregistration forms because you won't be recognized in their system. They used to email processed forms, but only to those with active electronic health insurance credentials. Therefore, if you are handling filings for a company, it is best to ensure you have the proper digital access credentials so you can print whatever documentation you need directly from them.

Does anyone here have experience dealing with a significant income tax refund? We’re looking at a pretty substantial amount coming back to us—around $2333—mostly because of the prepayments we made, and since we're applying some tax credits to lower our taxable income. I was wondering if anyone else has filed for a refund like this recently? What does the actual process look like? Do you just file the request along with your tax return and wait for the direct deposit, or is there more to it?

Paul Carter40 said:Kota, thanks, I'll give it a shot today. 🙂
Got a new question for you. 🙂
I'm thinking about buying a car abroad (over in Germany) using cash—which I'd pull from the business account—and then putting the car under the company name.
Is there a specific limit or cap on how large a cash receipt can be for it to be valid—you know, for business expense justification—or is there anything else I should probably know before I go through with this?
Thanks!

Man, I really hope someone weighs in here. About a year ago, I was practically knocking on every door asking if there was a limit on cash transactions within the EU, and nobody could give me a straight answer. Some people insisted the rules applied one way $1667 ,while others claimed they didn't apply at all. By the time the dust settled, my client had backed out of the deal anyway, so I dropped it. It would be great if someone who has actually dealt with this firsthand could provide some clarity.

Paul Carter40 said:1. So, regarding the income tax filing—do we skip the KPI stuff entirely now and just submit the new P-PPI form?
2. Has anyone here used Synesis to calculate self-employment contributions with a February 15th effective date and then tried running a Joppd? I’ve entered everything, but every time I try to save the Joppd, it just throws an error at me...
Tnx

1. To be honest, you never actually submitted the entire KPI unless an auditor specifically asked for it later; it was always just a summary of receipts and expenses. Think of this new P-PPI as essentially being that same kind of summary.
2. I actually handled my own payments and successfully sent off my Jopp today. HOWEVER—do yourself a favor and download today's updated version of Synapse. They had a few bugs in there; for instance, in my previous version, the employment contribution wasn't pulling into the XML format correctly, even though the screen showed it was entered and it appeared on the form itself. Once I pulled the latest update today, everything worked perfectly.

graniterider10 said:I received that money from the agency back in October, but I only actually used the contributions as an expense for two months—November and December. I get what you're saying, and I know it’ll all balance out eventually... but that specific influx bumped up my 2015 tax liability and my prepayments for 2016. I realize the expense side will lower my 2016 taxes... but until then, who knows what'll happen.😵

People have already mentioned something about this here... I'll dig into it some more.

I actually already gave you an answer to this specific question back on page 174. If you feel like your quarterly estimates are too high because of those incentives, you can always file a formal request with the IRS along with a revised summary to adjust your prepayments. If you need some proof that this works, here is the official inquiry I sent to the IRS and the formal response they provided:

"To whom it may concern, I am a small business owner who received a hiring incentive in 2015 in the amount of $9.25 for a new employee. I recorded this amount as income, which means my taxable income for 2015 is higher than it would otherwise be, consequently increasing my tax liability. I understand that I will pay this increased 2015 tax by April 15, 2016. My concern lies with the estimated quarterly tax payments for 2016. Since the 2015 tax liability is divided by twelve to determine the 2016 installments, it doesn't seem equitable to pay significantly higher quarterly amounts for 2016 simply because I received a one-time incentive. Can I submit a request alongside my tax return to have my quarterly payments calculated solely based on my standard business income, excluding the 2015 incentive that inflated my tax liability?"

Response to submitted form

Prepared by: Regional Office
Response content: Regarding your inquiry, Section 47 of the Internal Revenue Code outlines the method for paying estimated taxes for self-employment income. Paragraph 3 stipulates that the IRS may, upon a taxpayer's request, adjust the required prepayment amount. We suggest you contact your local IRS field office to proceed with this adjustment.