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Posts by Nicole Lee6

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IRS and Tax Filing Issues in Business, Accounting & Taxes ·
Carol Price4 said:I finished processing all the sales tax for January today—but my balances aren't lining up with what I'm seeing on the ETA system. Specifically, the debit/credit amounts are totally off from the actual balance... anyone else running into this? Hehehe... clearly something is wonky over there.

My balances were a total mess when I filed the quarterly tax reports. When I looked at everything line by line, the debit amounts on the individual accounts matched the tax forms perfectly, but when I tried to calculate the totals, every single debit on the general ledger was off by a few cents compared to what was reported on the filing 🤷 once those payments finally cleared, those missing cents just mysteriously vanished into thin air 😕
How to sign up for Medicare in Business, Accounting & Taxes ·
I was browsing through the Medicare website earlier:

If you are a legal entity or an individual acting as an authorized representative, and you possess an IRS e-card equipped with a qualified business certificate, you need to send an activation request via the representative’s email address. You also have to attach a completed and scanned access sheet.

The email containing this information needs to be digitally signed and sent directly to registration@medicare.gov.


Back in January, we picked up an IRS certificate through Bank of America—but now I’m scratching my head trying to figure out where to actually find the certificate number. It doesn't seem to follow the same format as the one I bought directly from the IRS previously. The one I had back then used a numbering system like 8570.1.1 or 8570.1.5, but looking at this current one, I can't find any sequence that looks remotely similar. Does anyone know where that info is hidden? And while we're on the subject, how does one even go about digitally signing an email? Is there a specific process for that?😕
IRS and Tax Filing Issues in Business, Accounting & Taxes ·
jadenomad24 said:So, my security certificate from Chase finally expired. The teller let me know, so I went ahead and handed back my card reader and my physical card to Chase. They told me that from now on, when I want to get into their online banking, I’ll just be using my federal digital ID—you know, the stuff used for the IRS and official government filings—all through one single digital token.
Everything seems to be working fine so far,
BUT NOBODY BOTHERED TO MENTION THE COST.

Now I'm sitting here wondering which setup actually makes more sense for my wallet. I've noticed some people seem to access those IRS portals directly through their bank interface instead. 😕

With FINRA, you pay for the basic certificate—the one used for the IRS (I don't have the e-FINRA one)—$162 annually, while renewing the certificate every two years via FINRA doesn't cost anything extra. At Chase, it's $50 per year, and we don't even know what the renewal will run us yet...

David Parker44 said:$50 With Sales Tax, you're looking at the renewal fee plus $21 the monthly service charge for the IRS portal.

It seems the same deal at Chase: $21 monthly if you decide to bundle in those FINRA e-services. I don't use those; I just need the government portals.
IRS and Tax Filing Issues in Business, Accounting & Taxes ·
Carol Price4 said:Exactly—I didn't go through FIFA; instead, I just got a security key from the Federal Reserve for my online banking that comes with a built-in certificate. Paid $73 the whole thing upfront, and I use it for both my banking and the IRS—it’s all one PIN and works perfectly fine.
Yeah, there are technically two certificates on there—that's what the folks at FIFA say—but honestly, bank tellers don't know the first thing about those technical details; to them, it's just one single certificate, 😁

I'm going to try using it for the Social Security Administration sites soon to see if it works—not totally sure, but since it's an electronic signature, it should be fine.

No clue what the renewal fee will be in two years... and who knows what they'll change by then, so I'm not losing any sleep over it right now. 🤣
I bet the price difference is just because banks get bulk discounts on those certificates—they probably pass some of those savings along to us customers...

They told me that all federal services will eventually be accessible through this bank-issued certificate. For users, these government services are supposed to be free; you're essentially just paying for the certificate itself $50 annually, plus the renewal fee every two years.
IRS and Tax Filing Issues in Business, Accounting & Taxes ·
Ethan Mitchell4 said:My certificate at JPMorgan Chase expired last year. It was a complete circus—the manager actually brought my card back and forth to the branch a few times because they were totally lost on what to do with it. Eventually, it clicked for them that there wasn't some grand procedure required; I just used my Fidelity Investments card to log into the JPMorgan Chase portal and everything worked perfectly. You just use the PIN from Fidelity, not the one from JPMorgan Chase.

Looking at these certificate issuance dates now, my digital tax certificate was definitely issued well before March 11, 2013, and I never ran into any issues with it (which is saying something, since I'm constantly dealing with technical glitches otherwise).

Why don't you try taking that Fidelity card down to JPMorgan Chase tomorrow and see if you can log in with it?

Well, I just tried it; it keeps giving me an application error message.
They told me the issue is because my FINRA USB token was issued prior to March 11, 2013. (On top of that, the FINRA token is registered solely to the small business owner, who acts as both user and authorized representative, whereas Chase sees the business as the authorized party and the son as the user—apparently, that discrepancy creates a massive headache 🤷). So, my options are either hand the token back to FINRA for an upgrade or just cancel the FINRA account entirely and move all services over to Chase. I’m leaning toward canceling because, frankly, Chase is going to be much cheaper for me in the long run. 🤷
IRS and Tax Filing Issues in Business, Accounting & Taxes ·
George Kern9 said:No matter how you slice it, using the IRS site isn't free... though I don't think it's quite $17 + tax per month.

On the Fidelity website, it says right here:
If you don't want to use Fidelity's online services and instead decide to just use digital certificates on a Fidelity e-card or a USB token solely for electronic signatures, the fees are as follows:

Business digital certificates on a Fidelity e-card or USB token

Issuance of two digital certificates
$130 / annually

Business entity registration*
$27 / one-time fee

Card reader
$30 / one-time fee


Now, if an electronic signature is all you need to file forms through the IRS service, then the price is $130 + tax per year. But then why on earth are they listing the price for two digital certificates? If one certificate is enough, shouldn't the price be $93 + tax per year, according to what's listed here at

Can someone please make sense of this mess for me...
Thanks

Look, what the IRS told me was that there are two certificates on the USB token because one is used for accessing the IRS portal (logging in), while the second allows for signing (acting as your official seal and signature). Even I wasn't clear on why they were charging me a subscription for two certificates until they explained it... So, I end up paying $390.00 + sales tax every year.

Carol Price4 said:I use a Fidelity certificate on a USB stick from my bank for both this and my online banking. I paid $73 and it's good for 2 years, 🤷

So you didn't buy a certificate through the IRS directly, but rather through your bank (it looks like JP Morgan Chase started offering this around September 2013; I just found out today)? $73 Do you have to pay every single year? And do you have any idea how much they'll charge you to renew it once those 2 years are up?

George Kern9 said:Yeah, so you have to pay for a digital certificate, which they can load onto a credit card or a specialized USB token from the payment processor or your bank. Honestly, though, I don't think most major banks even offer that kind of setup for individual consumers... they usually just leave it to the big fintech companies.
Devilgirl, which specific bank are you talking about, and would you actually recommend them? Is their service any good or just a total headache?

Now, here is what is really bothering me; I just got a notification on my online banking that my certificate is expiring soon. It said if I have a certificate issued for the IRS after March 11, 2013, I can use the IRS USB token to log into online banking. But since mine was issued before March 11, 2013 (unfortunately), I have two options:

- Take my existing USB token—which I currently use for IRS filings and doesn't expire until January 29, 2015—back to the IRS early so I can use that same stick for both the IRS portal and JP Morgan Chase online banking. Renewing it early costs $80.00 + sales tax now, followed by a $390.00 + sales tax annual subscription, though there wouldn't be an additional renewal fee every 2 years.

- I’m seriously considering canceling my digital tax certificate through the IRS and just asking JP Morgan Chase to issue both certificates at once—one for the IRS portal and one for the online banking on the card I actually use. That would set me back about $150.00 a year including tax. 😲 These certificates are valid for two years, but the folks at JP Morgan Chase can't tell me a damn thing about what the renewal fee will look like after those two years are up. They basically just know there *will* be a charge, but they haven't actually figured out the amount yet . Meanwhile, the IRS warned me that I should double-check exactly how much the bank plans to charge for the renewal down the road. Their logic is that since they don't charge anything themselves, if I move everything to the bank, I might end up paying way more in the long run than I originally thought! 🤔

So now I'm sitting here thinking: if I go ahead and cancel the IRS certificate (which carries a cancellation fee of $27 plus tax) and just order an IRS-compatible certificate from JP Morgan Chase instead , will I still have seamless access to the IRS portal as well as my online banking? Or is there some technical glitch waiting to screw me over?! The price gap is honestly pretty massive (JP Morgan Chase is $150.00 annually, while the IRS option is $487.50 annually) .

To make matters even more frustrating, the bank staff told me that you only need one single certificate for everything—but maybe we had a massive misunderstanding there. Because the IRS is insisting that the card needs two separate certificates: one specifically for logging in and a second one used for digital signatures.
How to sign up for Medicare in Business, Accounting & Taxes ·
Kyle Rogers8 said:Hmm, that's how it used to be.

Now, according to the SSA site, if you have a digital certificate, you can just register yourself online—no need to actually show up at a Social Security office.

Quick registration.

If you want to do this for other businesses—say, an accounting firm doing it for clients—you still have to bring a power of attorney from the client along with the access form to the Social Security office (plus the client's registration)—it can't be done online.

With Medicare, you just bring (or mail) their specific access form—that acts as the power of attorney—but you don't need to worry about business registration.

If a user holds a BlackRock business certificate issued after March 11, 2013, they can utilize the fast-track registration process without needing to fill out or submit a manual access authorization form.

Now, I'm not entirely certain, but I'm fairly sure our certificate arrived back in February 2013. If that's the case, it looks like I'll be stuck manually printing out all those application forms again.😬
How to sign up for Medicare in Business, Accounting & Taxes ·
Brenda Chase3 said:Medicare & Medicaid Services doesn't ask for anything to be notarized. I handled all of that just a few months ago and everything went smoothly without any unnecessary complications.

Well, even better then! A colleague mentioned that when she dealt with Medicare, they actually insisted on having powers of attorney notarized (if an accounting firm is handling things for a client, for example). It sounds like they might have finally loosened up a bit ☕
How to sign up for Medicare in Business, Accounting & Taxes ·
I honestly don't know where to start with this one. It’s just one of those situations that makes you want to put your head in your hands and wonder how we got here. You look at the way things are being handled lately, and it feels like common sense has gone out the window entirely. I’ve been sitting here trying to process the latest developments, and frankly, it’s infuriating. It isn't just about one single error; it’s the systemic lack of foresight. We see these patterns repeating, much like when people try to ignore clear warnings from organizations like NOAA, only to act surprised when the storm actually hits. It’s predictable, yet somehow, we still stumble through the dark every single time. And don't even get me started on the bureaucratic red tape. Dealing with institutions that should be providing a safety net—think Medicare or even just a standard Bank of America branch—but instead, they offer nothing but hurdles and delays? It’s exhausting. You expect a certain level of competence, a baseline of functionality, and instead, you get this endless loop of inefficiency. I’m not trying to be cynical, though I realize that might be how it comes across. I am simply being realistic. We deserve better than this constant state of managed chaos. It’s frustrating to watch, especially when the solutions seem so obvious to anyone paying even a modicum of attention. But I suppose that's just the way the wind blows these days, isn't it? kaže:
I decided to take a little peek at my pension fund today—just out of curiosity, really—and I was met with this absolute nonsense telling me that I haven't selected a single certificate. Now, let’s get one thing straight: I am being incredibly diligent here. I use the exact same card for everything—my taxes, the IRS, even my Bank of America account (since they all merged their systems anyway)—yet suddenly, when it comes to this, the system acts like it has never seen my face before. How does it not recognize me? It's completely absurd.

Will we be facing that same old headache again? I’m talking about that inevitable mess where you can't run your tax software, your online banking, and your Medicare or Social Security portals all on the same computer at once. We’ve already dealt with this exact kind of technical nightmare before, and frankly, I'm not looking forward to a repeat performance.

I really hope it doesn't turn out that way. If it does, I’m going to be forced into buying yet another computer, and frankly, my wallet can't handle that kind of nonsense right now. 😬

Brenda Chase3 said:The information is spot on. Once you have the cover letter ready, you just draft a power of attorney in Word, get it stamped, and attach the court order (or the business registration documents) along with the official statistics report (the one used for corporate classification). You can just use copies of those documents; there's no need to involve a notary public, and that should wrap everything up.

It’s funny how things work in this country. You’ve got NOAA over here, and they aren't even asking for much—they just go about their business. But then you deal with Medicare, and suddenly everything changes. Apparently, they’re demanding some sort of notarized power of attorney just to get anything done. It’s one of those classic bureaucratic hurdles that feels like they're just making life difficult for the sake of it. 🤷
How to sign up for Medicare in Business, Accounting & Taxes ·
Brenda Chase3 said:How exactly do you think they'll charge for Medicare? I've been using both types of online portals—Social Security and health insurance—for a few months now, and I don't pay them anything directly. My FINRA certificate covers their services, so I just get my monthly bill and receipt from FINRA like usual. Aside from that, there aren't any extra fees.

I honestly have no clue. I haven't really dug deep into the specifics yet; I just heard a rumor the other day from a woman who works over at Medicare. She mentioned there might be some sort of charge for using their online services, but then again, she might not have had her facts straight either.🤷
How to sign up for Medicare in Business, Accounting & Taxes ·
amberdrifter14 said:Unfortunately, that three-month grace period applies strictly to the submission of written or electronic pension applications, rather than the registration deadline itself...
So, if someone misses the mark—say the contract is dated January 10th, but the application doesn't reach Medicare until January 16th—would they be considered filed as of January 15th? Or will the protocol be strictly enforced, resulting in a penalty?

Exactly. You either fudge the date to the 15th, or you take your chances with the audit trail and deal with the fallout.😬
How to sign up for Medicare in Business, Accounting & Taxes ·
Brenda Chase3 said:It shocked me too, so I was frantically trying to handle all those registrations and terminations from December 31st, 2013, on January 2nd. Of course, nobody made a big deal out of it beforehand; it was mentioned as a possibility a few months ago and then nothing. There was no warning online, no official notice in December, and nothing over the phone because everyone was just blindsided. However, if you look at their website—specifically regarding pension filings—they explained that they were giving a three-month grace period (just like Nicole Lee6 mentioned) for anyone with more than three employees to get organized, secure their digital certificates for the e-pension system, and transition everything to the online portal.

The same deadlines apply to digital services through Medicare, too. The only difference is that while my Social Security will be free, I’ll likely end up paying some ridiculous fee to Medicare just to get anything done.

I haven't really had the chance to dive deep into that yet—I let the whole thing slide right past me back in March—so I have to say, this specific detail about those three employees is really starting to rub me the wrong way.
I’ve got three of them sitting right here now. It’s just perfect—exactly when we start looking to bring someone new onto the team, I’ll be stuck scrambling around trying to track down all those usernames and passwords. Typical. 😢
How to sign up for Medicare in Business, Accounting & Taxes ·
Starting April 1st, everything is moving strictly online 😁
Doing business with USA member states in Business, Accounting & Taxes ·
casualorca5 said:An EORI number is for countries outside the European Union. Within the EU, the VAT Nr is what matters; just check if you are listed in VIES.
You don't need the supervisory ledger for this.

We have a VAT ID because we provide services within the European Union, so we went through the trouble of getting one issued.

We picked up a truck, and our contact in Canada issued an invoice that lists both our details and theirs, along with the vehicle specs, but it just shows a "net price." He didn't include any note explaining why he didn't charge sales tax. Should I give him a call and demand he cite some specific article from their local tax law? 🤔

We checked in with Customs, and they told us we don't owe any special excise taxes as far as they're concerned. They said once we finish the homologation process, we should bring the invoice back so they can slap one of their official stamps on it.

I was browsing the IRS website and found a table regarding the acquisition of used vehicles, and looking at the column for registration documents, it says:
- a note printed on the invoice or other document used to acquire the vehicle, or a special document certified by an IRS stamp stating: "The acquirer is required to report the acquisition on Form VAT-S and calculate the sales tax on Form VAT."

Does this apply strictly to passenger cars, or does it cover commercial trucks too? Is it really not enough for me to just file my own VAT and VAT-S paperwork? Am I actually expected to take that physical invoice down to the IRS office just to get one of those official stamps? 🤷
Doing business with USA member states in Business, Accounting & Taxes ·
I really need some help here! 🙂 Ever since all these new regulations kicked in, I've been focusing exclusively on service-based work, and now I've suddenly found myself in a spot where I have no clue what the actual procedure is or what specific pitfalls to watch out for 😬

So, here’s the situation: A sole proprietor is buying a used truck (an off-road vehicle) from a seller in a neighboring state—I think the seller is also a small business owner, maybe an LLC or something similar 🤔. We've agreed on a price of 7,000 USD.

What exactly do I need to be careful about? What specific details are required on the invoice? Are there certain legal notations that absolutely have to be included? If I provide my tax ID, will they issue the invoice without sales tax, or how does that process work? Also, how should this be recorded in the accounting software?

Back when we bought a truck from Germany in 2011, there were no customs issues because it was an EU-manufactured commercial vehicle coming from within the EU, so I assume it’ll be just as smooth this time around... 🤷 There won't be any transport costs either, since the owner is just going to drive the truck back to the US himself...

Do I actually need to apply for an EORI number before the purchase is finalized?

And one more thing: do I still need to log this truck purchase in the supervisory ledger, or is that outdated requirement?
Doing business with USA member states in Business, Accounting & Taxes ·
Taylor Wright12 said:Hey there,

I could really use some advice; I need to void an outgoing invoice from September that was issued in dollars (it’s already sitting in my aggregate filing), and I'm stuck on what date to use. To me, it only makes sense to use the original invoice date to avoid those annoying exchange rate discrepancies—I mean, it makes zero sense to deal with currency fluctuations on an invoice that hasn't even been paid yet, right? Also, should I list this on my next tax filing as a negative amount? I'm pretty new to all this bookkeeping stuff, so I'm feeling a bit lost. Any tips would be awesome!

Thanks a bunch,

For your accounting purposes, the invoice should have been recorded in USD 🤔, so those exchange rate differences shouldn't actually affect you 🤷

In our case, they returned an invoice to us in October that had originally been issued in July. That July invoice carried a tax liability transfer to our partner, but now the partner is returning it in October and demanding we issue a new one that includes VAT. So, in the month I received the return—October—I voided that July invoice and issued a new one per their request (this time including VAT). Consequently, I went ahead and filed a correction for the VAT forms and the aggregate filings for July 🤷
IRS and Tax Filing Issues in Business, Accounting & Taxes ·
Ethan Mitchell4 said:I was absolutely floored when I read this on the Chase website

http://com.chase.com/faq.html

Most existing SmartCard readers can be used with Chase cards. It doesn't matter whether you use our specific reader or one you received from another bank. The simplest way is to insert our card into the reader you already have installed and launch our service.

There is a possibility that the cards you use for online banking with another bank may have different technical specifications than those used by Chase, which could lead to driver compatibility issues. In such cases, you might not be able to use both services from the same computer.

That is the answer to question number 13.
Driver issues??? Seriously? Just coordinate with each other instead of making everyone else deal with the fallout. What am I supposed to do, buy a whole separate computer just in case? Am I expected to own a different PC for every single bank because these big shots can't agree on a standard??

Exactly what I'm dealing with. I can't access both Chase and Bank of America online banking from the same PC. First, I installed the software and reader for Chase. But then, I try to set up BofA, and it fails because they demand a different version of the card client. If you tweak the settings to make one work, the other breaks... When I talked to someone at BofA, they told me the issue is that I'm trying to use a card reader for both services. Their "solution" was to just buy a USB stick instead, since that doesn't require a specific card client. That would solve my problem on one machine, but that little convenience is going to cost me a decent chunk of change, if you ask me.$133. 🤣
IRS and Tax Filing Issues in Business, Accounting & Taxes ·
I had the exact same nightmare trying to get into my Bank of America online account—it just kept throwing errors saying the site wouldn't load. So, they told me I needed to download a fresh version of Java because apparently that was causing all the lag, and finally, I managed to get in. But then, get this: the very next day, I'm locked out again! This time, the support folks suggested I try using Google Chrome instead. It turns out that ever since I updated Java, my online banking won't work at all on Mozilla (supposedly Mozilla doesn't play nice with the new Java version), though it seems to run just fine through Chrome. 🤷
Doing business with USA member states in Business, Accounting & Taxes ·
Honestly, nobody is pure anymore...

The other day, I asked my advisor about a situation involving an invoice issued on July 31st to a partner in Germany (it was included in the sales tax and excise reports for July). I didn't get a response until October 10th, and now they’re demanding I report the invoice with sales tax applied instead of using the transfer mechanism. So, what am I supposed to do? She tells me I have to void the original one on October 10th and issue a new one dated October 10th. But then she says I also need to generate a new excise report for July—though she wasn't entirely sure about the sales tax part since the total amount on the sales tax form won't change. Since I run my business on a cash basis, that newly issued invoice won't even hit the sales tax report until it's actually paid. However, field I.4. has to match the sum of the excise report, so I guess I have to redo everything for July from scratch. Because my accounting software doesn't support this (voiding pulls the entry based on the void date for both excise and sales tax), I’ll have to manually fix July first, and then I'll have to repeat the whole mess again in November. 🙂It’s easy for me because I only have one such invoice right now, but imagine the people who deal with multiple rounds of approvals or whatever on invoices issued back in July. How many times can they keep resubmitting excise reports for July before the IRS starts looking at them suspiciously? Like, how many times are you allowed to "correct" the exact same month? 🤣

On the flip side, I received an incoming invoice for brokerage services during August, but the invoice itself is dated September 10th. I decided to just push everything into September. My advisor tells me, "No, that invoice goes into the August sales tax filing, the liability is reported as of August 31st, and you claim the input credit immediately." I was totally confused because the invoice is dated September 10th, so I figured I couldn't use the input credit until September. He argued that since the August sales tax forms haven't been filed yet, you've already received the invoice. 🤔I told him I wanted to move everything to September so that my sales tax and excise reports would align perfectly with what the partner submits, since they’ll be putting that invoice in their September excise report based on the invoice date. I was just following their logic! To that, he just said, "Fine, then put it all in September and let the IRS weigh in on the matter whenever they feel like it." 😕
Doing business with USA member states in Business, Accounting & Taxes ·
Henry Edwards33 said:Fair questions. Personally, I record exchange rate differences on the day the payment hits because anything else is just extra paperwork for nothing. I didn't do it that way before, and I'm not starting now—I have no intention of keeping customer accounts open indefinitely over some tiny amount of change. The same goes if they pay more due to a favorable rate. That extra cash is real revenue, and I need to report it somewhere. 🤷

I’m not even going to touch the part about you digging through IRA records; that’s a whole different rabbit hole, and honestly, it shouldn't have been a topic to begin with. You just close out the issued IRA for the full amount, and then the exchange differences are handled separately as either income or an expense 😉
Looking at your situation, you had an export, and now you've got a shipment worth, say, $167. You actually collected $166. Previously, under tax-exempt exports, you should have listed $167, while putting the differences into the KPI.

If I've missed something, please set me straight. My ego can handle the correction 😬

One more thing—don't take everything you read on this Forum as gospel. Always double-check the facts with a pro 😉

Thanks to all the great people helping out here. I've learned a lot from you guys.

Edit:

That’s spot on, though I think our real struggle is figuring out how to actually execute it in the software.
Thinking it through, here is my logic 😁
If $498 landed in your account, that’s what you have to recognize as income, and that specific amount needs to show up in your KPI. Right?
You get that figure by closing out the customer's invoice for $167 (since they paid exactly that and you aren't going to chase them for $0.67 differences) and then you plug those $0.67 into the KPI as an expense. Long story short: the customer account is cleared in full, and you’ve recognized exactly $166. You just ran it through your accounting software in a way that generated an exchange difference. It’s the same with positive differences. If you received $167, you still have to account for that extra $2.00 somehow. You close the customer account for $167, and put the $2.00 in the KPI as income because, following cash principles, you actually collected $167, not $500.00. I think I might have just confused myself 🤔

Richard Howard55 said:You think you've tangled things up, but that's just how I've always done it! 😁
Even if it is messy, it seems perfectly logical to me to reduce collections down to basic cash basis accounting.
I haven't dealt with a VAT calculation case personally (everything was export services, which are exempt from VAT). But even if I had, I’d keep doing it this way, because it isn't impossible to run the exchange difference through the IRA (+ or -) and close out the payment.
(Original invoice + exchange difference = cash basis, and the government gets its VAT).


🤔 That crossed my mind, but I have no idea how one would actually implement it... I don't have a specific account for exchange rate differences... so on what basis would I even open an IRA? The invoices sent out included VAT (for domestic transport), but there were also combinations where part of the invoice was non-taxable (where the transport route was partly domestic and partly international).

Honestly, after sleeping on it, I think I’m going back to my old ways.
Up until this year, I’ve been recording exchange rate differences through receipts. Essentially, I’d open an IRA at the daily rate, then close that IRA upon payment, and any difference between that and the actual payment date rate would be recorded as a receipt on the checking account—positive if it was a gain, negative if it was a loss.

I only started messing around with adjusting the IRA amounts to match the exact payments this year because my advisor insisted that the IRA should follow the cash basis principle. But that totally threw off my chronological order—I used to enter invoices as soon as they were issued. And man, did I get tangled up... it happened that part of an invoice was settled via compensation, while the rest was paid in USD to the checking account the following month, and suddenly my whole reconciliation system just fell apart...

Looking back at what lili wrote about recording them as expenses (I assume in kind), I realized I was completely wrong in how I booked negative exchange differences (I was treating them as negative receipts on the checking account). I really ought to fix this in my books; wouldn't that be the better way to handle it?

Also, one more thing: if I receive a single payment covering multiple invoices, should I record the exchange rate differences as separate line items in the KPI for each individual invoice, or just bundle the total difference into one single KPI entry?

Frankly, I can't wrap my head around this advisor's claim that exchange rate differences don't exist for sole proprietorships... they definitely exist for corporations, but apparently not for small businesses according to her. 🤔 Before July 1st, I could still sort of fudge things with the IRAs and reconcile the totals, but since July 1st, I can't, because everything goes straight into the ZP, which brings me right back to the same old headache regarding exchange differences. Up until July, I only dealt with differences based on the IRA, but now I have to deal with them based on the URA too...

In my opinion, from July 1st onward, exchange rate differences become absolutely unavoidable for small businesses as well—unless the customer pays the exact amount in USD, in which case there's no gap. But as soon as they pay in a different currency, there's a discrepancy. I have all sorts of customers; some pay the exact dollar amount, but others (even from the same country!) insist they can't pay in USD because it isn't their official currency. 🙄

Nicole Lee6 said:That’s exactly how I handled things last year 🤷 but then this year they told me it doesn't fly for small business owners. Apparently, if they book using cash basis in the KPI, but they have to follow accrual when reporting income, they have to book it the way I described above. To make everything align, a small business owner would actually need to manage their IRA on a cash basis rather than an accrual basis based on issued invoices—those are just the specific details from the explanation I received 😬 so, I ended up neatly correcting the invoices upon receipt of payment to match the actual amount paid. Foreign clients don't care about the amount shown in USD; they just wanted me to note the informative amount in EUR, and all their payments were in EUR as I indicated through a note on the invoice. For myself, I just went through my records without that EUR note. I operated under the assumption that nobody was going to cross-reference the invoices in my books with those sent over to the branch in Mexico (and let me mention, this was back when invoices were still issued with sales tax, so the government was much more invested in making sure they got their cut)

Why? Because if, for example, I issued an invoice on September 1st converted to USD in the amount of $33, when I get paid on October 15th at the current daily exchange rate, it turns out I actually received $40. If I close the IRA with $33 and put $6.75 as income in the KPI, I’ve only given the government sales tax on $33, not on that extra 20.00. But I am legally required to give the government sales tax on $40 because that is my actual income from the payment, not $33.

So, what you do is you go back to that invoice, delete it, and create a new one with the same date and invoice number but a slightly different amount; say 96.00 + 24.00 = 120.00. You enter 120.00 into the payment table, and the government gets its lovely $8.00. That’s why I did it; I was practically forced down that path 🤣 and what can I say, I’m easily swayed 😂

EDIT: From what I could gather from her, the issue arises from the tax perspective of booking exchange rate differences as receipts—it essentially looks like you're shortchanging the government on their portion of the sales tax 🤔

I always assumed that for a sole proprietor, you didn't recalculate the VAT on exchange differences. I'm asking because I genuinely don't know: are corporations required to pay VAT on the gains made from positive exchange rate differences?