Accounting for Sole Proprietors: Tax & Bookkeeping Tips

casualorca5;55496240 said:

cosmictinker24 said:So, I get it.
I'm not recording this interest anywhere, so I suppose it needs to be part of the explanation... I mean, there has to be some kind of paper trail, right?
The person in this role before me... she didn't record the interest, and she didn't bother explaining those deposits to the FBI either. It seems a bit sketchy to me, honestly, because at the end of the day, the bank activity has to reconcile with the actual receipts.

cosmictinker24;55506016 said:

casualorca5 said:

casualorca5;55506088 said:

cosmictinker24 said:

Carol Price4;55513127 said:

casualorca5 said:I will attempt to summarize, and please correct me if I am wrong:
Income:
late fees collected from customers, recorded in KPMG, excluding sales tax
interest on checking/savings accounts paid by the bank, not in KPMG, noted in explanations
taxed at year-end

Expenses:
late fees paid to the FBI, not in KPMG
late fees paid to vendors, recorded in KPMG, no sales tax deduction
business loan interest, recorded in KPMG,
🤔

dustyscout8 said:Does anyone have clarity on this? Back in September 2015, an issue of Accounting and Taxes noted that licensed accountants were being introduced. It stated that under the new Accounting Act, if a business owner outsources their accounting tasks to other legal entities or individuals, those parties must hold a specific license to perform such duties. This mandate was set to take effect on January 1, 2018.

Does anyone actually grasp the implications here? Is the requirement essentially saying that every single bookkeeper is now forced to be licensed, or what exactly is the catch?

cosmictinker24;55518012 said:

Carol Price4 said:Thanks, casualorca5..
But I'm really struggling with the interest part—specifically, what we collect from customers.
So, I book the invoice normally in the IRA, but I put the interest under Inflows, without sales tax, using the type "extraordinary income"... the interest amount shows up in KPMG, but I don't include it in the sales tax forms. So, it doesn't go into the sales tax summary either..
What I'm wondering about is the end of the year—when looking at the annual Recapitulation of inflows and outflows, those interest payments show up in the Inflows section via the bank statements..
Should those interest amounts be specified somewhere else so the IRS knows they're actually interest?? Like, do I need to write an explanation stating that the discrepancy in the bank statement inflows refers to interest, or how does that work??..
Usually, we receive payments on behalf of clients, and we specify those separately for the FBI (listing which clients they are and when the disbursement happened) to show those aren't our income since we're just passing them back to the clients...
Now I've just got this whole dilemma regarding these collected interest amounts to solve..
Thanks!

ruggedheron13;55515154 said:So, this small business owner just set up shop and dumped a bunch of cash into his workspace. He did all the electrical work himself. Since he paid for most of the materials upfront with cash, looking at the receipts, I feel like I could just dump it all straight into KPIs right now. But honestly, those installs are going to last him years. When I'm doing the books, can I just categorize all those receipts as expenses under Section 22 (even if some are around $100) and then just total them up to list as long-term assets on the tax return so I can depreciate them over time?

Look, you can go that route or you don't have to on the tax return. It’s your call. Personally? I just write those things off immediately.

S&P 500;55518906 said:

cosmictinker24 said:Interest collected from customers goes only in the KPI; no explanation to the IRS is required, as they are shown as Revenue./👍

casualorca5 said:Not in-house accountants.😁

Olivia Cruz86 said:Hey everyone!

So, I’ve got this outgoing invoice from back during the ISIS era—it was logged in my QuickBooks system then, but the actual payment didn't hit until 2015 (using Synesis software)
Here’s the headache: if I jump back into the 2014 files and try to mark it as paid on, say, September 17, 2015, it just won't show up in my New York City reports for 2015.
Does this mean I have to manually re-enter the whole damn invoice into the 2015 books and set the payment date to 9/17/2015 just so the system actually recognizes it in the 2015 records??
Also, quick question—and yeah, I know, I'm totally new to this and probably asking something obvious—but when I'm entering an invoice into the system at the very top, am I supposed to put the payment date or the actual issuance date for every single individual invoice?

Thanks a bunch

ruggedheron13 said:When you opened your 2015 books, did you carry over the closing balances from 2014? If you did, that invoice should have carried over with a January 1st date, and now you can just go in and update the payment method. Or did you start the new year with a completely clean slate?

casualorca5 said:Not in-house accountants.😁

amberbadger17 said:I’m honestly crossing my fingers that this means those of us running our own shows don't have to scramble for a license just yet. And if we actually do have to get one, what's the deadline for getting it sorted?

Thanks!

Olivia Cruz86 said:Ugh, and how the heck am I even supposed to do that transfer? I'm still basically a total newbie with this software—I definitely didn't carry anything over yet... anyone out there who actually knows what they're doing care to help me out?

Henry Edwards33 said:01.01.2018. 😳

If you head over to the Tools section on the home screen, you'll see an option for Year-End Closing. Just run that, and it’ll automatically carry all your opening balances over into the new year.

Olivia Cruz86 said:Ugh, and how the heck am I even supposed to do that transfer? I'm still basically a total newbie with this software—I definitely didn't carry anything over yet... anyone out there who actually knows what they're doing care to help me out?

ruggedheron13 said:Here’s how you run the year-end closing: pick last year's ledger, look for the "Tools" box on the right side, and head into the year-end close section. Just select date 12/31/201x and a new ledger will pop up. Since we're talking about a sole proprietorship, the KPI stays empty, but the system handles the transfer of unpaid invoices automatically. Once that's done, you can jump into any specific invoice and close it out. In your situation, I wouldn't bother re-entering that 2014 invoice. If you do, you'll just be hitting your revenue account again, which messes up your actual numbers when you're trying to check your sales tax threshold. It's better to just go through the reception module and record the payment manually...

Olivia Cruz86 said:Thanks, ruggedheron13!!
But what happens if, say, someone pays off an old invoice from 2011 while we're sitting in 2015?