Accounting for Sole Proprietors: Tax & Bookkeeping Tips

Oh man, thanks so much stormybadger8! I totally went on autopilot when I saw "B2B" and immediately started thinking about the European Union—I guess I just have those old memories of how intense everything was back when we were first joining the EU. My bad, Olivia Cruz86, I completely missed that you were asking about Mexico. Just ignore my previous answer, and a huge thanks to our forum member for catching that mistake!

Are the late interest charges on my tax card considered a tax-deductible expense?

ruggedheron13 said:Are the late interest charges on my tax card considered a tax-deductible expense?

Yep, they are.

Jack Young said:Yep, they are.

Interest paid on payroll taxes isn't considered a deductible expense for small business owners.

Henry Edwards33 said:Interest paid on payroll taxes isn't considered a deductible expense for small business owners.

Has anyone dealt with an audit regarding interest lately? I'm getting mixed signals everywhere... one person tells me it's a valid deduction, while another says it's a no-go. Apparently, it’s fine for corporations, but doesn't count for small business owners? Just trying to get some clarity here...

Since they aren't explicitly listed as deductible expenses under Section 7 of the Corporate Income Tax Act, they count as tax-deductible for the winners—though honestly, I haven't a clue how it works for income earners.

ruggedmaker2 said:Since they aren't explicitly listed as deductible expenses under Section 7 of the Corporate Income Tax Act, they count as tax-deductible for the winners—though honestly, I haven't a clue how it works for income earners.

Under the current Tax Law, they aren't covered by Section 25, subsection 11 regarding individual income.

11. Late payment interest resulting from overdue public obligations (such as income tax, VAT, or Social Security contributions) isn't considered a deductible expense.

Henry Edwards33 said:Under the current Tax Law, they aren't covered by Section 25, subsection 11 regarding individual income.

11. Late payment interest resulting from overdue public obligations (such as income tax, VAT, or Social Security contributions) isn't considered a deductible expense.

Thanks!

What happens to taxes and contributions when closing a small business?

The business has two owners, no employees, follows the standard income tax rules, and isn't registered for VAT. Let's say it shuts down in July. How does the tax calculation work for this specific year? I'm assuming that once the business closes, the owners will then deregister from Social Security and Medicare...

Drew Allen77 said:What happens to taxes and contributions when closing a small business?

The business has two owners, no employees, follows the standard income tax rules, and isn't registered for VAT. Let's say it shuts down in July. How does the tax calculation work for this specific year? I'm assuming that once the business closes, the owners will then deregister from Social Security and Medicare...

Small business owners can shut things down just like any other business. If there are outstanding payroll taxes or contributions owed, those credits won't be applied toward their service history until all debts are settled. Every single invoice—both incoming and outgoing—has to be recorded in the books as if they were fully paid. Additionally, if the business owns any long-term assets, those have to be accounted for and liquidated properly. Once that's done, everything gets submitted along with the tax return by the usual February deadline, just like they've always done.
Exactly, they'll be deregistered from Social Security and Medicare based on the specific date listed on the official dissolution paperwork.

hey, anyone know if a small business owner opening a separate location needs all the bills in the branch's name or just the main business? also, do I need to run separate books for that spot?

Olivia Cruz86 said:Hey there, fellow forum dwellers!

So, quick question—if an employee is out on vacation for the entire week, do I just log them under the GO category for 8 hours every single day?
I mean, surely I don't need to be logging their daily or weekly rest periods too, right??

Thanks!

??? 🤔

Olivia Cruz86 said:Hey there, fellow forum dwellers!

So, quick question—if an employee is out on vacation for the entire week, do I just log them under the GO category for 8 hours every single day?
I mean, surely I don't need to be logging their daily or weekly rest periods too, right??

Thanks!

That’s right, you don't need to log the daily rest period.

Jack Young said:That’s right, you don't need to log the daily rest period.

Thanks, Olivia Cruz86!

It’d be totally ridiculous if we had to report every single day off, but man, I am completely lost here!!!

I find myself facing two little dilemmas, and I’m feeling a bit stuck... I've just launched a small business—not registered for sales tax yet—focusing on roadside assistance and auto repair services.

1. Is there a requirement to maintain inventory records? Specifically, do I need to log spare parts into a warehouse system and then clear them out via invoices, or is that unnecessary for my setup?

2. If I happen to use my personal vehicle—a cargo van—for service calls, can I write off 100% of the fuel costs, or am I stuck with the standard 70/30 split like everyone else?

ruggedcyclist74 said:I find myself facing two little dilemmas, and I’m feeling a bit stuck... I've just launched a small business—not registered for sales tax yet—focusing on roadside assistance and auto repair services.

1. Is there a requirement to maintain inventory records? Specifically, do I need to log spare parts into a warehouse system and then clear them out via invoices, or is that unnecessary for my setup?

2. If I happen to use my personal vehicle—a cargo van—for service calls, can I write off 100% of the fuel costs, or am I stuck with the standard 70/30 split like everyone else?

1. Unfortunately, yes, you absolutely have to maintain inventory records.

2. My take is that if that van is used exclusively for roadside assistance duties, you should be able to claim 100%. It's similar to when someone runs a car rental agency and uses a personal vehicle for the rental fleet—at least in my experience, I can write off everything at 100% because it is being used strictly to carry out the registered business operations.

Thanks, you’ve pretty much confirmed my suspicions... I was feeling a little turned around there for a second, wondering if I had somehow managed to miss a key part of the sales tax law myself...

Hey there—so I’m planning on starting my own small business here in the States, and I've been doing a bit of digging to figure out which specific books I actually need to keep on hand... I've been scrolling through the forums and honestly, this place is a lifesaver, but I hit a bit of a wall on one thing. I can't quite wrap my head around the actual difference between a receipt book and a sales and accounts receivable ledger... from what I can gather, it looks like you're basically logging the exact same info in both... any idea what the deal is?

Look, they aren't the same thing. 🙂 You put everything you’ve actually collected into your receipt book, but that other one—the sales and accounts receivable ledger—is specifically for tracking open items (stuff that hasn't been paid yet) that go through a bank transfer. The assumption is that anything else was handled in cash right then and there. 🙂

amberbadger17 said:Look, they aren't the same thing. 🙂 You put everything you’ve actually collected into your receipt book, but that other one—the sales and accounts receivable ledger—is specifically for tracking open items (stuff that hasn't been paid yet) that go through a bank transfer. The assumption is that anything else was handled in cash right then and there. 🙂

So, let's say you're running a small cafe or a local bistro—just to walk through the logic here—and you head over to a grocery store to grab some supplies with cash. You get a receipt, right? In that scenario, you’d just toss that receipt into your receipt book as an expense, rather than logging it in your sales and accounts receivable ledger... At the same time, say a utility bill from ConEd shows up for the electricity you used. Since you aren't planning on paying it for a few days, you'd log that specific bill in your sales and accounts receivable ledger first. Then, once you actually cut the check or pay it, that's when you finally record the transaction in your receipt book... if that makes sense...