Accounting for Sole Proprietors: Tax & Bookkeeping Tips

unicom said:The liability for 2013 still stands, you just stop recording any prepayments for 2014.

Got it, thanks. Quick follow-up though... what about utility bills? Can I just claim 30% of the total amount? My issue is that I don't have physical receipts for everything, even though the bank statements clearly show the payments went through. Is it okay to just take 30% based on what's visible on my bank transfers, or am I strictly required to provide an actual invoice?

ruggedheron13 said:Got it, thanks. Quick follow-up though... what about utility bills? Can I just claim 30% of the total amount? My issue is that I don't have physical receipts for everything, even though the bank statements clearly show the payments went through. Is it okay to just take 30% based on what's visible on my bank transfers, or am I strictly required to provide an actual invoice?

Why 30%? And whose name are the utilities actually under?

ruggedheron13 said:He’s never actually had an accountant before. He did some work for just a few months last year, and now he’s stuck with me for the year-end wrap-up. He isn't even registered for sales tax... Honestly, I have no clue what I'm going to do or what can actually be written off. I’ll try to squeeze every possible expense out of this pile of papers, but since he was doing retail, I don't even have a price list or inventory logs... Man, why did I ever get into this profession? 🙂 thanks everyone!

Basically, anything backed up by actual paperwork can pass.😉
Retail, huh? So who was handling the purchase orders or running the inventory counts then? And this whole thing about the receipts doesn't make sense to me—by law, they're required to issue them. If everything was invoiced properly, why is there even a struggle with turning in the receipts? 😕

Robin Cook4 said:So if I'm already tracking everything through the cash receipts and disbursements journal, do I still need to go through the inventory records?

That’s exactly the point! The cash receipts and disbursements journal tracks what’s actually been paid or collected. It's pretty straightforward—only actual cash movements hit that book.

Personally, I record every single invoice in the current month using accrual accounting. I don't just wait for the money to move so I can pull my KPI reports. Since I book everything regardless of whether the cash has cleared, I have a perfect paper trail. Honestly, isn't it way easier than playing detective with your bank statements trying to figure out which bills were actually settled? Once I've logged them, I can get everything posted 🙂

rowdyhawk25 said:Why 30%? And whose name are the utilities actually under?

It falls on the homeowner... since the business is registered at that same address.

shadowwalker79 said:Basically, anything backed up by actual paperwork can pass.😉
Retail, huh? So who was handling the purchase orders or running the inventory counts then? And this whole thing about the receipts doesn't make sense to me—by law, they're required to issue them. If everything was invoiced properly, why is there even a struggle with turning in the receipts? 😕

It’s not an issue with the suppliers. It’s more about the business owner failing to keep track of their own records. There isn't any inventory to speak of, either. The business wrapped things up before the summer hit and just stopped operating. Now, I'm basically just trying to book some entries so there's at least a paper trail to close everything out for the final filing...🙂

ruggedheron13 said:It falls on the homeowner... since the business is registered at that same address.

Here’s how you handle it: the homeowner can essentially issue invoices—basically rebilling those amounts—to the business. Otherwise, you absolutely need a formal lease agreement for either the whole apartment or just a portion of it, specifically stating exactly how much the business is responsible for regarding utilities. Once you have that contract in place, you have the legal ground to claim those expenses. If you can't set up that rebilling process, then there's no way to write those costs off as business expenses.

Hey, can someone check my math here? Bought a machine on Oct 28th, 25% depreciation rate, 4-year lifespan, N.V.$23333
So, this is how I calculated the depreciation amount
70,000.00 * 25% / 12 * 2 months = 2,916.00

Robin Cook4 said:Hey, can someone check my math here? Bought a machine on Oct 28th, 25% depreciation rate, 4-year lifespan, N.V.$23333
So, this is how I calculated the depreciation amount
70,000.00 * 25% / 12 * 2 months = 2,916.00

$972

Brenda Chase3 said:$972

Why on earth is it 2,916.68?😕

$23333 / 4 (25%) = $5833 per year.
$5833 / 12 (months) = 1,458.33
1,458.33 x 2 = 2,916.66🤷

do i where does the depreciation amount go on my tax return?

Robin Cook4 said:do i where does the depreciation amount go on my tax return?

The depreciation calculation goes straight into the KPI—treat it as an in-kind expense—and you’ll just attach the standard depreciation schedule to your tax filing.

placidlynx92 said:The depreciation calculation goes straight into the KPI—treat it as an in-kind expense—and you’ll just attach the standard depreciation schedule to your tax filing.

Thanks a ton. That part about 4.3—income from assets and property rights—totally threw me for a loop.

Hey there, folks,
quick question for you all: when I'm looking at my bank statements, should I be counting those self-employment grants as part of my incoming deposits?

They're headed out.

stormybadger8 said:Why on earth is it 2,916.68?😕

$23333 / 4 (25%) = $5833 per year.
$5833 / 12 (months) = 1,458.33
1,458.33 x 2 = 2,916.66🤷

My calculator keeps spitting out 1,458.34. That’s why. It’s just a rounding difference in the decimals, so I don't think a couple of pennies are going to make much of a difference here. 🤷

Brenda Chase3 said:My calculator keeps spitting out 1,458.34. That’s why. It’s just a rounding difference in the decimals, so I don't think a couple of pennies are going to make much of a difference here. 🤷

Well, then something is seriously broken with your calculator.🤷
I have no idea how 1,458.333333 would ever round up to .34.😕

stormybadger8 said:Well, then something is seriously broken with your calculator.🤷
I have no idea how 1,458.333333 would ever round up to .34.😕

I'll go ahead and ask him. 🙂
If we're really splitting hairs over pennies here, then 2,916.67 is the mathematically sound figure, since 1,458.33333 multiplied by 2 equals 2,916.66666.

Henry Edwards33 said:They're headed out.

That's what I figured. Thanks!

Hey everyone, if anyone happens to know...

Does the sales tax on a new piece of equipment that we’re putting down as a fixed asset need to be added to the sales tax listed in our income and expense reports? Basically, I'm wondering if the sales tax shown in our expense logs should perfectly match what's reported on our actual sales tax filings.