Accounting for Sole Proprietors: Tax & Bookkeeping Tips

Hey, quick question about some assets bought back in Dec 2014. Should I list them on the 2014 tax return or wait until 2015 since they don't actually go into service until the following month?

Robin Cook4 said:Hey, quick question about some assets bought back in Dec 2014. Should I list them on the 2014 tax return or wait until 2015 since they don't actually go into service until the following month?

You should include it in your 2014 filing so the purchase price is properly recorded, though you won't be claiming any depreciation expense yet; that will show up as $0.00.

Small business contribution rates for 2015 (noting they've climbed slightly compared to the 2014 figures):

http://www.chamberofcommerce.com/press/news/new_rates_for_2015

casualorca5 said:It's a cash receipt. At a place like Silicon Valley, you'd probably just handle that through the IRA under the cash option.
Just be careful; don't log it in both the ledger and the IRA, or you'll end up double-counting your income.👍

Wait, isn't the bank balance supposed to stay unrecorded? Doesn't it just become income through outgoing accounts—basically, cash flow through the IRU that gets logged for VAT purposes?

David Green642 said:Wait, isn't the bank balance supposed to stay unrecorded? Doesn't it just become income through outgoing accounts—basically, cash flow through the IRU that gets logged for VAT purposes?

For sole proprietors, I don't record the deposit to the checking account. I just record it as an IRA, cash payment, which then automatically flows into the KPI.

Hey everyone, look, I deal with this mountain of tiny little expenses all year—utility bills, random office supplies, stuff like that. I don't bother putting these through my KUI to claim the input tax because honestly, it's just not worth the headache. Instead, I just dump them straight into the KPI. My question is, since I’m not using the input tax in the KUI, am I allowed to book the full amount including the sales tax, or am I stuck booking it without the tax? Hope that makes sense... :-)

shadowdrifter99 said:Hey everyone, look, I deal with this mountain of tiny little expenses all year—utility bills, random office supplies, stuff like that. I don't bother putting these through my KUI to claim the input tax because honestly, it's just not worth the headache. Instead, I just dump them straight into the KPI. My question is, since I’m not using the input tax in the KUI, am I allowed to book the full amount including the sales tax, or am I stuck booking it without the tax? Hope that makes sense... :-)

Maybe just run them through the IRS, that way you actually get to use the input tax—assuming the invoice has everything required. It might be a bit slower, I guess.🙄

shadowdrifter99 said:Hey everyone, look, I deal with this mountain of tiny little expenses all year—utility bills, random office supplies, stuff like that. I don't bother putting these through my KUI to claim the input tax because honestly, it's just not worth the headache. Instead, I just dump them straight into the KPI. My question is, since I’m not using the input tax in the KUI, am I allowed to book the full amount including the sales tax, or am I stuck booking it without the tax? Hope that makes sense... :-)

Well, you can just book it directly to the KPI as a gross amount, using both the first and last columns for expenses in the KPI.

So, I’ve got this situation where I have an outgoing invoice from December 2014, but only a chunk of it actually got paid. Then, the rest of the balance didn't hit until January 2015... Now I'm stuck trying to figure out how to close this account out properly—like, where am I even supposed to log this? If I try to dump the remaining balance into the 2014 IRA, it completely vanishes from my January 2015 KPI, which makes zero sense.

Olivia Cruz86 said:So, I’ve got this situation where I have an outgoing invoice from December 2014, but only a chunk of it actually got paid. Then, the rest of the balance didn't hit until January 2015... Now I'm stuck trying to figure out how to close this account out properly—like, where am I even supposed to log this? If I try to dump the remaining balance into the 2014 IRA, it completely vanishes from my January 2015 KPI, which makes zero sense.

Maybe just re-enter the full invoice into the IRA for 2015.
You could just record the portion paid in 2015... or even the part from 2014, though that might end up being nowhere.

casualorca5 said:Maybe just re-enter the full invoice into the IRA for 2015.
You could just record the portion paid in 2015... or even the part from 2014, though that might end up being nowhere.

Thanks! 🙂

Quick question—if a small business owner gets a cash receipt for gas, does that go through the petty cash account or straight to the KPI? Also, how do you record the deposit in the books from a fiscal cash receipt?

I’m not recording the deposit itself because I already logged that cash deposit into the IRA account from which it originated. As for the fuel expense, I’ve been running that through the URA ledger since I'm using pre-tax deductions. When I get down to the payment method section, I just select cash so everything flows correctly into the right KPI column.

So, here's the deal. I'm switching from flat-rate tax to keeping formal books on November 1st. Does the tax I paid under the old system count toward my deductible expenses for taxes paid?

So, I was wondering if it’s actually true that small business owners aren't supposed to just pull cash straight out of their merchant account as an advance on their earnings? Like, am I hearing correctly that you have to transfer the funds over to your checking account first before you can even think about withdrawing anything? I guess I honestly just heard about this for the first time yesterday, so maybe I'm totally off base here... 🤦

Never heard of that. A small business owner gets to handle their cash however they damn well please—no explanations required. At the end of the year, they just subtract their deductible business expenses from their total revenue and pay the tax on whatever is left over.

Yeah, I was there for the first time yesterday too, and honestly, I just ended up feeling pretty lost and confused about the whole thing

Aaron Young85 said:Yeah, I was there for the first time yesterday too, and honestly, I just ended up feeling pretty lost and confused about the whole thing

First vote 🤷

Where did you even hear that?

Aaron Young85 said:So, I was wondering if it’s actually true that small business owners aren't supposed to just pull cash straight out of their merchant account as an advance on their earnings? Like, am I hearing correctly that you have to transfer the funds over to your checking account first before you can even think about withdrawing anything? I guess I honestly just heard about this for the first time yesterday, so maybe I'm totally off base here... 🤦

Where'd you even hear that? Of course not. And why would they even need a checking account for that.

Robin Cook4 said:Where'd you even hear that? Of course not. And why would they even need a checking account for that.

It’s about what you actually take home, not just what shows up on a gross income statement.🤔