Accounting for Sole Proprietors: Tax & Bookkeeping Tips

Hey everyone, I could really use some guidance here regarding fuel entries—our company owns a heavy-duty truck that we write off at 100%, but the owner also uses his personal car sometimes. He’ll occasionally use the company card to fill up with diesel, though since those instances are pretty rare, I just end up booking everything under the truck.

The tricky part is when he uses the company account to grab gasoline for his other vehicle, which is strictly a personal gas car. Since I’m already pulling a massive stack of ATM withdrawal logs to cover the cash needs for that private vehicle, I’m totally stuck on how to properly reconcile those specific gas receipts in the ledger.

Thanks!

Matthew Mendoza9 said:Hey everyone, I could really use some guidance here regarding fuel entries—our company owns a heavy-duty truck that we write off at 100%, but the owner also uses his personal car sometimes. He’ll occasionally use the company card to fill up with diesel, though since those instances are pretty rare, I just end up booking everything under the truck.

The tricky part is when he uses the company account to grab gasoline for his other vehicle, which is strictly a personal gas car. Since I’m already pulling a massive stack of ATM withdrawal logs to cover the cash needs for that private vehicle, I’m totally stuck on how to properly reconcile those specific gas receipts in the ledger.

Thanks!

You simply cannot book those expenses because that vehicle isn't registered to the business.

Brenda Chase3 said:You simply cannot book those expenses because that vehicle isn't registered to the business.

But the bill was paid using the company card—it went straight out of the business account... how am I supposed to balance this ledger?

Can someone please double-check my process for closing down a small business?

- We close out all open accounts receivable and accounts payable using the official business dissolution date—recording them as in-kind transfers.
- We run the final depreciation calculations.
- Regarding remaining inventory—we clear it through accounts payable by taking the quantity left on hand multiplied by the current market value—recorded as an in-kind transfer.
- For any physical assets listed on the balance sheet, we research their current market value and clear them through accounts payable—in-kind.
- We reconcile the cash account and all outstanding liabilities (taxes, local permits, etc.). These go through expenses since they were incurred even if they aren't paid until after the shutdown—in-kind. This means I only book the bank statements up to the actual closing date, right? Not after?

PLEASE, if anyone actually knows this stuff, let me know if I'm on the right track or completely off base. THANKS 🎉

Self-employed, registered for sales tax.

I was hoping for some clarity... when filling out my ledger, do I only include invoices that actually have sales tax listed? Or should I also be logging ones where no tax is charged, like those that fall under an exemption?

For instance, I have a service fee from JPMorgan Chase for managing my account, and the statement says it's exempt from tax based on specific IRS regulations...

Do those types of entries go into the ledger?

Thanks.

David Green642 said:Can someone please double-check my process for closing down a small business?

- We close out all open accounts receivable and accounts payable using the official business dissolution date—recording them as in-kind transfers.
- We run the final depreciation calculations.
- Regarding remaining inventory—we clear it through accounts payable by taking the quantity left on hand multiplied by the current market value—recorded as an in-kind transfer.
- For any physical assets listed on the balance sheet, we research their current market value and clear them through accounts payable—in-kind.
- We reconcile the cash account and all outstanding liabilities (taxes, local permits, etc.). These go through expenses since they were incurred even if they aren't paid until after the shutdown—in-kind. This means I only book the bank statements up to the actual closing date, right? Not after?

PLEASE, if anyone actually knows this stuff, let me know if I'm on the right track or completely off base. THANKS 🎉

To be honest, I've been there. I was shutting down my own LLC once. You'll still file your standard tax returns for the year (especially if you're looking to jump back into a W-2 job soon), but watch out for the sales tax filings. I think the deadline used to be three months, but that was way back when I closed mine in 2011. I can't remember if the IRS or state laws changed since then, but I have a nagging feeling they might have. 🙂

Brandon Jackson4 said:Self-employed, registered for sales tax.

I was hoping for some clarity... when filling out my ledger, do I only include invoices that actually have sales tax listed? Or should I also be logging ones where no tax is charged, like those that fall under an exemption?

For instance, I have a service fee from JPMorgan Chase for managing my account, and the statement says it's exempt from tax based on specific IRS regulations...

Do those types of entries go into the ledger?

Thanks.

Yeah, I would. Honestly, it just makes my life way easier if everything is in one spot.

David Green642 said:Can someone please double-check my process for closing down a small business?

- We close out all open accounts receivable and accounts payable using the official business dissolution date—recording them as in-kind transfers.
- We run the final depreciation calculations.
- Regarding remaining inventory—we clear it through accounts payable by taking the quantity left on hand multiplied by the current market value—recorded as an in-kind transfer.
- For any physical assets listed on the balance sheet, we research their current market value and clear them through accounts payable—in-kind.
- We reconcile the cash account and all outstanding liabilities (taxes, local permits, etc.). These go through expenses since they were incurred even if they aren't paid until after the shutdown—in-kind. This means I only book the bank statements up to the actual closing date, right? Not after?

PLEASE, if anyone actually knows this stuff, let me know if I'm on the right track or completely off base. THANKS 🎉

Everything you’ve listed is spot on—that’s exactly how I handled things when I shuttered my own small business, though I spent months obsessively studying the tax code beforehand just to ensure I didn't screw anything up 😁. As for the statements, you don't book anything dated after the official closing day.

placidlynx92 said:Everything you’ve listed is spot on—that’s exactly how I handled things when I shuttered my own small business, though I spent months obsessively studying the tax code beforehand just to ensure I didn't screw anything up 😁. As for the statements, you don't book anything dated after the official closing day.

🙏 THANKS! 🙂

amberbadger17 said:To be honest, I've been there. I was shutting down my own LLC once. You'll still file your standard tax returns for the year (especially if you're looking to jump back into a W-2 job soon), but watch out for the sales tax filings. I think the deadline used to be three months, but that was way back when I closed mine in 2011. I can't remember if the IRS or state laws changed since then, but I have a nagging feeling they might have. 🙂

THANKS! 🙂 🙂

Does the write-off value go straight to expenses, or does it just sit in the summary of receipts and expenditures under write-offs?

😉

Robin Cook4 said: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?

And just curious—why the switch to formal business books on November 1st?

amberbadger17, thanks for getting back to me.
I have more questions coming, but right now I'm just stuck on filling out the Sales Tax return...

Back in April, I bought a laptop—fixed asset—and applied the full input tax credit on my standard sales tax filing under the line for "domestic purchases at 25%."

Now I'm looking at this amended return form and the second page is confusing me... there's Section VIII for input tax adjustments, section 1.5 for fixed asset acquisitions, and all sorts of other things.

Does any of that actually apply to my specific credit, or do I just put it in the regular line and leave the rest of the page blank?

amberbadger17 said:Yeah, I would. Honestly, it just makes my life way easier if everything is in one spot.

Personally, I don't record those kinds of things in the general ledger right now; I just track them under KPIs and then list the foundation amount as a link. I guess... I'm not sure if that actually works?

amberbadger17 said: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.

Honestly, this news caught me off guard too. I mean, wouldn't a bank teller tell you if that wasn't allowed?!
When I was setting up my LLC earlier this year, the representative told me I didn't need to close my existing personal checking account because I could just transfer deposits into it. But she did mention it isn't strictly mandatory.

graniterider10 said:Personally, I don't record those kinds of things in the general ledger right now; I just track them under KPIs and then list the foundation amount as a link. I guess... I'm not sure if that actually works?

Honestly, I don't see why not if it makes your life easier. In fact, it actually makes more sense that way. My own system is pretty stripped down—it just feeds directly into the KPIs automatically. If I tried to do everything through formal foundation entries, my standard date-range reports would completely break. It’s infuriating. Keeping it this way is much cleaner for my workflow. If some IRS auditor decides to come sniffing around asking questions, I can easily walk them through exactly how I set it up.

Brandon Jackson4 said:amberbadger17, thanks for getting back to me.
I have more questions coming, but right now I'm just stuck on filling out the Sales Tax return...

Back in April, I bought a laptop—fixed asset—and applied the full input tax credit on my standard sales tax filing under the line for "domestic purchases at 25%."

Now I'm looking at this amended return form and the second page is confusing me... there's Section VIII for input tax adjustments, section 1.5 for fixed asset acquisitions, and all sorts of other things.

Does any of that actually apply to my specific credit, or do I just put it in the regular line and leave the rest of the page blank?

Ugh, I dealt with this last year and just dumped everything into the regular line. I didn't even touch those other columns. Honestly, I probably should have, but whatever, it's done. I'm totally lost here.

Anyway, column V on the main return is giving me a massive headache. Since I already filed the credit form without actually reading the fine print, I was thinking about just carrying over the credit from the last filing into the February calculation and calling it a day for the rest of the year.

But I didn't.

So, here's the thing: I have outstanding credits from 2013 and 2014 sitting there. Do you think it would be a disaster if I just lumped both of those into the February filing and kept moving forward like that?

I really don't feel like calling the IRS agent again because she honestly couldn't tell me anything useful. I asked her the same thing last year when they sent out those notices about how to fill out these specific columns, and she basically told me to leave it blank and not include previous filings.

Thanks!

I could really use a quick answer from someone before my filing deadline hits.

Back in 2014, I bought a laptop. I claimed all the input tax credits and listed it on my sales tax return under "domestic supplies at 25%."

Now that I'm sitting down to fill out the actual sales tax report, I'm getting tripped up by the section for the 8th Amendment regarding input tax adjustments, specifically right below it where it asks about long-term asset acquisitions.

I've been digging through the IRS guidelines online, and I'm under the impression that the 8th Amendment adjustment is reserved for more complicated scenarios... like if a business exited or entered the tax system mid-year and had to adjust previously reported credits. Basically, just correcting old entries.
If anyone here has dealt with purchasing long-term assets during 2014, could you let me know which line you used to report that input tax on your sales tax return?
Thanks so much.

So, I’m thinking an owner's draw from their own small business doesn't actually count as taxable income, right? Or am I totally off base here? Also, what's the deal with filing quarterly sales tax returns instead of monthly? 😁

Aaron Young85 said:So, I’m thinking an owner's draw from their own small business doesn't actually count as taxable income, right? Or am I totally off base here? Also, what's the deal with filing quarterly sales tax returns instead of monthly? 😁

...it’s not an expense. Sales tax isn't even a business cost; it's just money you collect to hand straight over to the IRS. 🙂