Accounting for Sole Proprietors: Tax & Bookkeeping Tips

Quick question here,

If I’m running my own side business while also working a regular 9-to-5 at a company, does the IRS combine both incomes when calculating my tax bracket? Also, can I use net operating losses carried over from previous years to offset my self-employment income dating back to 2014?

Justin Torres34 said:Quick question here,

If I’m running my own side business while also working a regular 9-to-5 at a company, does the IRS combine both incomes when calculating my tax bracket? Also, can I use net operating losses carried over from previous years to offset my self-employment income dating back to 2014?

Yes, they do. When you file your tax return, you’ll report your W-2 earnings from your employer under one section, and then list your self-employment income separately under the appropriate schedule.
If you reported a net operating loss on your previous year's filing, you can certainly apply that carryover to reduce your current taxable income.

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... 🤦

Man, reading this gave me a good laugh because I was absolutely livid last year when I went to my local Chase branch to withdraw some cash and they slapped me with this massive fee just for wanting physical bills. I ended up hanging out on forums like this trying to figure out the legal way to move funds into checking first. So, look, you don't *have* to transfer it to checking, but it’s a smart move because the bank's fee for cash withdrawals is at least 0.19% plus a flat fee of at least $1.75, whereas if you just pull it from your checking account, it doesn't cost you a dime. Of course, you’ll still have to pay the bank a tiny bit for the online transfer to move that advance into checking (just a buck or two, whatever the fee is for domestic wire transfers).

p.s. I actually wanted to deposit a big stack of hundreds via my checking account too, since my bank hits me with the same ridiculous fees for cash deposits, but people on here convinced me it was probably better not to. 😁

Bottom line? Why would you even give those white-collar banking thieves a single cent of your hard-earned money? If the high fees piss you off as much as they do me, you might as well donate it to the Red Cross or hand it to a guy on the street corner.

p.p.s. I’m seriously considering unsubscribing from email statements altogether, especially since they charge $0.03 per item—honestly, what a total scam. They need to be taught a lesson. 😠

David Green642 said:Just amend the sales tax return for specifically that quarter where you spotted the error. I suppose the 2014 annual totals will be affected too, so one should probably watch out for that.

I wonder if it is even possible to file an amendment right now, given that the original sales tax return was for the first quarter of 2014? I have already submitted three subsequent returns since then, so I am not entirely sure how that works.

I’m going to ask this one more time... tomorrow is my final deadline for submission...

Picked up a laptop back in 2014... used up the entire sales tax credit that month...

When filling out the sales tax forms, I’m putting the input tax in the same spot as before—domestic purchases at the 25 percent rate...
Do I need to fill out the second page of the form? Specifically section VIII and the tax adjustment... that is, 1.5, the net value of acquired fixed assets...

Thanks.

Thomas Diaz8 said:I wonder if it is even possible to file an amendment right now, given that the original sales tax return was for the first quarter of 2014? I have already submitted three subsequent returns since then, so I am not entirely sure how that works.

Sure you can—just make sure the date falls before the 2014 sales tax deadline, or specifically within that Q1 2014 window.

Brandon Jackson4 said:I’m going to ask this one more time... tomorrow is my final deadline for submission...

Picked up a laptop back in 2014... used up the entire sales tax credit that month...

When filling out the sales tax forms, I’m putting the input tax in the same spot as before—domestic purchases at the 25 percent rate...
Do I need to fill out the second page of the form? Specifically section VIII and the tax adjustment... that is, 1.5, the net value of acquired fixed assets...

Thanks.

No, just stick to the first part. Don't overcomplicate things...

David Green642 said:Sure you can—just make sure the date falls before the 2014 sales tax deadline, or specifically within that Q1 2014 window.

According to the guidelines for preparing final settlements issued by the IRS, it states the following:
If omissions in sales tax filings are identified during the period for submitting the final settlement, corrections should be made within the final settlement itself rather than through an amended return for a specific filing period.

Based on that, I suppose I don't actually need to amend the sales tax forms I've already sent out; instead, I just handle the correction within the sales tax audit form.

Is my understanding correct, I guess?

Thomas Diaz8 said:According to the guidelines for preparing final settlements issued by the IRS, it states the following:
If omissions in sales tax filings are identified during the period for submitting the final settlement, corrections should be made within the final settlement itself rather than through an amended return for a specific filing period.

Based on that, I suppose I don't actually need to amend the sales tax forms I've already sent out; instead, I just handle the correction within the sales tax audit form.

Is my understanding correct, I guess?

In theory, yeah—though they’ll accept it the other way too. Just do whatever you think makes sense; at the end of the day, the math works out the same.

I'm pretty new to all this 🙂
So, I've got a client who opted out of sales tax back on January 1st, 2015.
It's just a sole proprietorship—no employees, and they aren't under the flat-tax system either.
On January 15th, an invoice was paid ($5000) that was actually issued back in December when they were still registered for sales tax.
Does this mean I have to file a sales tax return for January even though they're technically out of the system, and then pay those $1000 (and I'm guessing there might be more late payments coming 🙄 later this year)?
Second thing—regarding Synesis—since they aren't in the sales tax system anymore, is it enough to just record everything (including sales revenue) through simple receipts and expenses, and call it a day?
Thanks

Charles Stewart69 said:Man, reading this gave me a good laugh because I was absolutely livid last year when I went to my local Chase branch to withdraw some cash and they slapped me with this massive fee just for wanting physical bills. I ended up hanging out on forums like this trying to figure out the legal way to move funds into checking first. So, look, you don't *have* to transfer it to checking, but it’s a smart move because the bank's fee for cash withdrawals is at least 0.19% plus a flat fee of at least $1.75, whereas if you just pull it from your checking account, it doesn't cost you a dime. Of course, you’ll still have to pay the bank a tiny bit for the online transfer to move that advance into checking (just a buck or two, whatever the fee is for domestic wire transfers).

p.s. I actually wanted to deposit a big stack of hundreds via my checking account too, since my bank hits me with the same ridiculous fees for cash deposits, but people on here convinced me it was probably better not to. 😁

Bottom line? Why would you even give those white-collar banking thieves a single cent of your hard-earned money? If the high fees piss you off as much as they do me, you might as well donate it to the Red Cross or hand it to a guy on the street corner.

p.p.s. I’m seriously considering unsubscribing from email statements altogether, especially since they charge $0.03 per item—honestly, what a total scam. They need to be taught a lesson. 😠

I was totally stunned when this elderly lady, who I'm pretty sure has been running her own bookkeeping business for like a century, told me something exactly like that. I know I'm still a newbie at this, but I was genuinely shocked at myself for even thinking I could make such a rookie mistake. Turns out, she was just giving me bad info. 😁 😁

Hey there!

Can someone walk me through how to properly record the sales tax return in the general ledger? This is for an LLC. I’m assuming everything gets booked on December 31st.

According to the filing, my input tax credit amount is $300.
Right now, my ledger balances look like this: account 1400 (input tax) shows $300, and account 1407 (tax receivables) shows $800.

Thanks a million in advance!!!

Is it actually normal that I still haven't received my decision from the FBI regarding mandatory contributions, even though the business was registered back on January 1st?! What on earth are they doing taking this long? I asked the clerk and she acted like she had no clue what I was talking about. I went ahead and paid everything for the first month anyway just so I don't end up buried in debt. And then there's my mom—she retired on December 31st, and she hasn't received her paperwork yet either, which obviously means no pension checks coming in. 😉Who is actually running the show here...??? It's a total circus!

graniterider10 said:Is it actually normal that I still haven't received my decision from the FBI regarding mandatory contributions, even though the business was registered back on January 1st?! What on earth are they doing taking this long? I asked the clerk and she acted like she had no clue what I was talking about. I went ahead and paid everything for the first month anyway just so I don't end up buried in debt. And then there's my mom—she retired on December 31st, and she hasn't received her paperwork yet either, which obviously means no pension checks coming in. 😉Who is actually running the show here...??? It's a total circus!

I started mine on Dec 10th and still nothing—so, don't sweat it too much!

I have no clue how things work these days, but back when I started my small business in the nineties, it took them a solid 29 months just to send me a decision.😍

I finally got the decision last week. Luckily, there are tables on the HOK website, so you can just make the payment without having to wait around...

I'm running a small business here in the States, registered for sales tax. Most of my work involves providing services, and I usually just issue retail receipts. But right now, I’m in a bit of a spot—I performed some services on-site for a company, away from my main office, and they want to pay me via direct deposit to my business account. What kind of invoice should I actually send them? My current software is only set up for standard retail receipts. If I just type up a manual invoice on a piece of paper—kind of like the ones I get from my own suppliers—how am I supposed to handle the tax reporting or filing? Or is it true that payments made through bank transfers don't need to be reported through the usual sales tax systems?
If anyone can point me in the right direction, I'd really appreciate it. I've mostly dealt with individual retail customers, so I've never had to bill a corporation before.

graniterider10 said:I'm running a small business here in the States, registered for sales tax. Most of my work involves providing services, and I usually just issue retail receipts. But right now, I’m in a bit of a spot—I performed some services on-site for a company, away from my main office, and they want to pay me via direct deposit to my business account. What kind of invoice should I actually send them? My current software is only set up for standard retail receipts. If I just type up a manual invoice on a piece of paper—kind of like the ones I get from my own suppliers—how am I supposed to handle the tax reporting or filing? Or is it true that payments made through bank transfers don't need to be reported through the usual sales tax systems?
If anyone can point me in the right direction, I'd really appreciate it. I've mostly dealt with individual retail customers, so I've never had to bill a corporation before.

As you noted yourself, you don't need to go through the standard retail fiscalization process for this type of transaction. However, that invoice still needs to include all the essential elements found on a standard receipt—just without the specific tax authority tracking codes. You would simply list the payment method as a bank transfer.

graniterider10 said:Is it actually normal that I still haven't received my decision from the FBI regarding mandatory contributions, even though the business was registered back on January 1st?! What on earth are they doing taking this long? I asked the clerk and she acted like she had no clue what I was talking about. I went ahead and paid everything for the first month anyway just so I don't end up buried in debt. And then there's my mom—she retired on December 31st, and she hasn't received her paperwork yet either, which obviously means no pension checks coming in. 😉Who is actually running the show here...??? It's a total circus!

Mine was registered on February 1st and I'm still waiting on my paperwork too.😵😵

Did you pay based on the amount from $1721?

If a foreign business (EU - Germany) sends an invoice for a long-term truck lease to a business here in the US, who is actually responsible for handling the sales tax?

I'm thinking the foreign company just issues the invoice without any tax applied, and then the US business handles everything on their end, recording the tax as both a liability and an input credit...

Am I on the right track here?