Accounting for Sole Proprietors: Tax & Bookkeeping Tips

Hey there!

Quick question—can a small business owner write off voluntary health insurance premiums and private specialist visits as business expenses?

Thanks!

Hey everyone, I could really use a little help if anyone has a sec 😵 just to see if my math actually adds up 😬

So, I run my own thing as a sole proprietor here in the States, and I’m about to hit that $250,000 threshold

Here’s the scenario I'm looking at:
Let's say my total annual revenue hits $133, which means I've officially blown past the $100 mark.

Based on how I'm seeing it:

- I'll have to register for sales tax and pay monthly or quarterly—is that basically just an advance on my year-end tax bill or what?
- Since my work falls under that "artistic services" category, I get a 25% deduction... so if we're talking $400,000, taking off 25% leaves me with $100
- Then, on top of that $250,000 baseline, I've got all my business expenses—let's say $3.25 in deductible input receipts
- That leaves $97, and since my total gross was over $360,000, am I stuck with a 36% tax rate?

So, if the annual tax is 36% of $290,000, that would mean $35...?

Am I tracking this correctly, or is there some other crazy tax rule I totally missed...

Thanks 😍

redmason4 said:Hey everyone, I could really use a little help if anyone has a sec 😵 just to see if my math actually adds up 😬

So, I run my own thing as a sole proprietor here in the States, and I’m about to hit that $250,000 threshold

Here’s the scenario I'm looking at:
Let's say my total annual revenue hits $133, which means I've officially blown past the $100 mark.

Based on how I'm seeing it:

- I'll have to register for sales tax and pay monthly or quarterly—is that basically just an advance on my year-end tax bill or what?
- Since my work falls under that "artistic services" category, I get a 25% deduction... so if we're talking $400,000, taking off 25% leaves me with $100
- Then, on top of that $250,000 baseline, I've got all my business expenses—let's say $3.25 in deductible input receipts
- That leaves $97, and since my total gross was over $360,000, am I stuck with a 36% tax rate?

So, if the annual tax is 36% of $290,000, that would mean $35...?

Am I tracking this correctly, or is there some other crazy tax rule I totally missed...

Thanks 😍

You can choose to file sales tax returns either monthly or quarterly.
Basically, you pay the difference between the sales tax collected from your clients and the sales tax you paid on business expenses. You'll need to maintain standard accounting ledgers plus income and expense logs.
Along with your sales tax filing, you'll submit your purchase records through the IRS portal.

- Since I get a 25% deduction for artistic work (which falls under that category), that means out of $400,000, I'm left with $100.

That’s not quite how it works anymore. You'll file your annual income tax return by the end of February for the previous fiscal year.

- On that $300,000, there are other deductions (let's say there's $3.25 worth of deductible business expenses)
- That leaves $97, and then I pay a 36% tax rate because total revenue went over $360,000?

So, would my annual tax be 36% of $290,000, which means $35...?

The income tax rate is 20% up to $360,000.$0.00 Anything above that is taxed at 30%.
Your taxable income is your gross business revenue minus business expenses, both excluding sales tax. You can also factor in depreciation and any other legitimate business deductions you qualify for.

Did I get that right, or am I missing anything else?

Don't forget the cost of your accountant.

Hey everyone, I could really use some guidance here. I’m working with a sole proprietor who is sitting on an outstanding receivable dating all the way back to 2012. To make matters more complicated—and a bit messy—the debtor company went through bankruptcy years ago and simply doesn't exist anymore. Is there a standard way to write this off or close out the debt in the books? The total amount is $667. Thanks so much for any insight!

Olivia Cruz86 said:Hey there!

Quick question—can a small business owner write off voluntary health insurance premiums and private specialist visits as business expenses?

Thanks!

Nobody seems to have a clue! Honestly, I'm sitting here staring at three different medical bills—we're talking $1,000.00 chunks of cash each—$267 and I'm just like, $600what gives?

Olivia Cruz86 said:Nobody seems to have a clue! Honestly, I'm sitting here staring at three different medical bills—we're talking $1,000.00 chunks of cash each—$267 and I'm just like, $600what gives?

The employer should be the one holding the insurance contract. Up to $833/year.
Tax-free benefits only apply to employees listed on the policy with the insurance provider. Individual policies taken out by an employee themselves don't count. Or at least, that's how I remember it.🤔☕

casualorca5 said:The employer should be the one holding the insurance contract. Up to $833/year.
Tax-free benefits only apply to employees listed on the policy with the insurance provider. Individual policies taken out by an employee themselves don't count. Or at least, that's how I remember it.🤔☕

So, here's my situation—I'm a small business owner and I picked up a voluntary health insurance policy for myself... basically just to cover some routine checkups at a local clinic. $600
I already paid $800.00
for a screening and bloodwork over at a different medical center, and then did physical therapy at a third facility. $333
Basically, can I write this insurance policy off as a tax-deductible business expense? I know we file specific payroll tax forms for employees, but what about solo entrepreneurs?
And what am I supposed to do with all these other medical receipts?

Supplemental health insurance premiums through $833 count as standard business expenses, just like anything else you can write off.
The rest of those costs don't qualify as deductible expenses.

Olivia Cruz86 said:So, here's my situation—I'm a small business owner and I picked up a voluntary health insurance policy for myself... basically just to cover some routine checkups at a local clinic. $600
I already paid $800.00
for a screening and bloodwork over at a different medical center, and then did physical therapy at a third facility. $333
Basically, can I write this insurance policy off as a tax-deductible business expense? I know we file specific payroll tax forms for employees, but what about solo entrepreneurs?
And what am I supposed to do with all these other medical receipts?

Preventative checkup costs are tax-deductible if they are provided for all company employees☕ Therefore👎

casualorca5 said:Preventative checkup costs are tax-deductible if they are provided for all company employees☕ Therefore👎

But this policy was only drawn up for him alone... and there's actually another employee on the payroll. 🤔
I read somewhere that it doesn't necessarily have to cover every single person, right?
I'm just gonna book this one specific policy... wait, did I also need to send over the paperwork for JPMorgan Chase?

Does anyone actually know how the tax refund process works when a customer from Canada comes by to pick up their order in person? They need that specific form to get everything stamped at the border.
Once I get that form back verified, am I supposed to refund them the full amount of the sales tax, or what? Because if I do, the $10 fee just to wire the money over to their account in Canada eats my lunch.

Hey everyone,

I really need some advice on how to handle this mess:

So, back in May, we had a check-up covered under our health insurance policy and it was paid for in cash. ($127 excluding tax)
But then, a month later, the invoice showed up in the mail and—get this—it got paid again via wire transfer. (My boss totally forgot he’d already settled it... classic...)
Since we ended up paying twice, they finally sent the money back to us.
What’s the easiest way to fix this in the books without losing my mind?
In May, I recorded it as a cash expense, which was the right move at the time.
But now, what am I supposed to do about that payout hitting in June and their refund showing up in July?

Thanks!

Hey,

My business just hit the $300,000 mark, and I’ve decided—for better or worse—to keep handling my own bookkeeping...

Does anyone have a link, a tutorial, or even just a checklist of what I absolutely need to stay compliant?
(Just a heads up, all my clients are international companies—I don't deal with the domestic market at all)

Thanks!

You’re better off paying someone else to handle your books. As soon as you start trying to figure out what needs to be done, you're just going to screw something up.

Hey everyone,

I know this isn't exactly about small business ownership, but maybe someone here can help me out. If there’s a better thread where I could find these answers, please let me know.

I recently started my own small farm business because, alongside my full-time job, I sell fruit and vegetables. For a small LLC that stays under the sales tax threshold, the limit is 300 $0.00. Does my regular salary count toward that 300 $0.00? I have a permanent employment contract...

Hey everyone, I'm hoping there are still some active folks in here who might be able to lend me a hand. My question is this: is it okay for a small business owner to transfer funds from their business checking account over to their personal account—say, to cover material expenses? I'm mostly looking to avoid those pesky bank fees for withdrawing cash directly from the business account. Thanks in advance, and hope you're all doing great!!

Hi there.

I’m looking for some bookkeeping advice. I run a small service-based business here in the States, and it’s just me running the show as a sole proprietor. I keep my books pretty simple—just tracking income and expenses since I don't deal with sales tax. I’m thinking about expanding my shop to sell prints of my artwork online (shipped via USPS) or even through local direct sales for cash. However, I’ve hit a bit of a roadblock regarding the rules for returns and exchanges on mass-produced items. Since these would be serialized products, I'm a little lost on how to handle things legally when a customer wants their money back...

So, I have a couple of questions:

1.- What is the standard legal timeframe for processing a return, exchange, or refund?

2.- How should I record a return in my ledger (specifically under the expense column)? I'm mainly wondering how to handle this if the return happens after the 48-hour window for voiding a transaction in the POS system has already passed.

Thanks for any help.

If you're bringing in an income, then by law, you have to register for sales tax...

Hey, how do you handle loans within an LLC?
If the owner lends money to the business or vice versa, is there a hard requirement to actually pay those back?
And what happens to any outstanding loans if the business shuts down?

If you're a small business owner registered for sales tax, you're required to put the R2 code on your invoice along with the note "Tax calculated on cash basis."
But what happens when I need to send out an invoice that gives the client, say, a 30-day window to pay?
It’s always the same story with these government contracts. I have to issue the invoice first just to get that 30-day countdown started.
The problem is, the payment hasn't actually hit my account yet, but the invoice is already out the door.
How am I supposed to follow the rules and include that specific note without running into a legal headache?