Accounting for Sole Proprietors: Tax & Bookkeeping Tips
in Business, Accounting & Taxes ·
Does a municipal grant (subsidies) count as revenue, and should I record it under receipts in the KPI books via the checking account?
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Accounting for Sole Proprietors: Tax & Bookkeeping Tips
in Business, Accounting & Taxes ·
Hi everyone, my mom is heading toward retirement, so we’re looking at transferring her small business over to me. I was wondering if anyone here has experience with this kind of transition? I'd love some guidance on what to look out for and what specific steps I need to take.
I feel like I have a decent handle on things, but there are still a few gray areas. I keep getting conflicting answers from different people, which is honestly pretty confusing.
So far, I've already filed the paperwork for her retirement, and I also submitted a request to the Department of Commerce to transfer the business to a direct family member due to her retiring. Her retirement date is set for December 31st, which means the official decision for me to take over should kick in on January 1st.
The folks at the IRS told me I should register the business effective December 31st so I can stay in the VAT system (since the business is currently registered for sales tax). They suggested filing a final return for the current owner and then starting mine. Anyway... I think I grasp those parts, but I'm completely lost regarding the employees. The law says all contracts are transferred, but does that mean I just write a memo stating that the existing terms still apply to the staff? Or am I supposed to keep them on but draft entirely new contracts with my own signature and stamp? Also, do I need to "terminate" them on December 31st and re-hire them on January 1st because the Tax ID changes? That seems like a massive headache. It feels more logical to just update the ownership info with the Social Security Administration since the business registration number stays the same.
I'm also wondering if I'll need to get entirely new point-of-sale and tax certification software/permits, since everything is tied to the Tax ID. There is just so much to manage here. If anyone knows the exact, step-by-step procedure—or if you could point me toward an expert who does—I would be incredibly grateful.
I'm really nervous about messing something up. 😢
I feel like I have a decent handle on things, but there are still a few gray areas. I keep getting conflicting answers from different people, which is honestly pretty confusing.
So far, I've already filed the paperwork for her retirement, and I also submitted a request to the Department of Commerce to transfer the business to a direct family member due to her retiring. Her retirement date is set for December 31st, which means the official decision for me to take over should kick in on January 1st.
The folks at the IRS told me I should register the business effective December 31st so I can stay in the VAT system (since the business is currently registered for sales tax). They suggested filing a final return for the current owner and then starting mine. Anyway... I think I grasp those parts, but I'm completely lost regarding the employees. The law says all contracts are transferred, but does that mean I just write a memo stating that the existing terms still apply to the staff? Or am I supposed to keep them on but draft entirely new contracts with my own signature and stamp? Also, do I need to "terminate" them on December 31st and re-hire them on January 1st because the Tax ID changes? That seems like a massive headache. It feels more logical to just update the ownership info with the Social Security Administration since the business registration number stays the same.
I'm also wondering if I'll need to get entirely new point-of-sale and tax certification software/permits, since everything is tied to the Tax ID. There is just so much to manage here. If anyone knows the exact, step-by-step procedure—or if you could point me toward an expert who does—I would be incredibly grateful.
I'm really nervous about messing something up. 😢
Accounting for Sole Proprietors: Tax & Bookkeeping Tips
in Business, Accounting & Taxes ·
ruggedcyclist74, thanks. That’s actually how I’ve been handling it, but I just wanted to double-check if I was on the right track.
🙂
best, 👋
🙂
best, 👋
Accounting for Sole Proprietors: Tax & Bookkeeping Tips
in Business, Accounting & Taxes ·
Could someone please clarify something for me: is the income tax and local surtax that a sole proprietor pays based on their assessment from the IRS considered a business expense? Or should I be recording it in my books by entering the amount with a minus sign in front of it? Alternatively, do I skip the bookkeeping entirely and just include it as part of a breakdown of bank account activity when I file my tax return, essentially treating it as something that wasn't included in the business expenses?