Accounting for Sole Proprietors: Tax & Bookkeeping Tips

David Green642 said:So who actually manages it then?

I’m not planning on calling the Forest Service—seems like a waste of time. If they’re fine with not paying, whatever... there's really no point...

If it's a tax—and let's be real, it is—it should show up on a standard tax card, since the government is the one pocketing it. 🤷

Kyle Rogers8 said:US National Forests—that’s why I dropped the link. 😉

Quincy:

I have zero intention of reporting this to the Forest Service; it feels pointless. If they're fine with people dodging the fee, then whatever... there's just no point... If it’s a tax—and it is—it really should be listed on our tax returns...

That's like demanding that fees for live music or a Netflix subscription show up on your tax return. 🤷

It's a levy—the legislature passed the law saying we have to pay it... to certain people...

But they didn't pass any law stating these funds go into the federal treasury, nor that the IRS should track these specific debts and payments.

Quincy:

because the government collects it. 🤷

Actually, it's collected by a state-owned corporation.

Look, I know it isn't perfect—it's pretty messy, honestly.
🤣

But that's the reality—the IRS doesn't even keep records of this specific fee.

cosmictinker24 said:We just got an invoice from a vendor who isn't registered for sales tax for some work they did for us. I'm wondering if this should even hit our books with the IRS, or... maybe it should? How do I go about recording this under Expenses as is—$167 without any sales tax included?

Thanks

Brenda Chase3 said:Of course it goes in. An invoice is an invoice, whether it includes sales tax or not. You simply enter the total amount of the invoice into your IRS records.

cosmictinker24 said:I usually enter the amount $167 and then put the rest under "not subject to $500" because if I just type in the total invoice amount, the software automatically splits it into the base price and the tax... In my KPI, I manually book it under expenses—against the checking account $167 and the total allowable expenses $167..
I know this sounds like a pretty dumb question, but I read somewhere that invoices without sales tax shouldn't be included in IRS filings... so I figured I'd share what I've been doing
thanks

Brenda Chase3 said:I have no idea who told you that only invoices with sales tax go into the IRS filings. All incoming invoices are valid entries; that is exactly why the "not subject to tax" fields exist in the first place.
The way you handled the entry sounds perfectly fine based on your description. 😉

Brenda Chase3 said:I have no idea who told you that only invoices with sales tax go into the IRS filings. All incoming invoices are valid entries; that is exactly why the "not subject to tax" fields exist in the first place.
The way you handled the entry sounds perfectly fine based on your description. 😉

Nicole Lee6 said:But personally, when I'm dealing with invoices that don't carry sales tax—say, an NPR subscription, car insurance, or those monthly bank service fees—I just log them directly into KPI under the Expense document type rather than running them through the expense journal (and I'm talking specifically about using unknown) 🤷

Brenda Chase3 said:From the perspective of the IRS, it doesn't really matter because you're ultimately just submitting a summary report anyway. Everything you mentioned qualifies as an invoice, so there’s no harm in entering them directly into the UR. Typically, we categorize things under "expenses" if they aren't formal invoices, whereas true costs are handled differently. But if you have a proper receipt or bill in hand, it belongs in the UR. We're talking about the exact same software here.🙂 It really just comes down to how you were trained; it's all just minor nuances.

Nicole Lee6 said:Aha, okay. In that case, I think I'll follow your lead and start logging them through the UR.

So, if I'm following this logic correctly, my "expenses" category would be reserved for stuff like employee payroll summaries, self-employment tax contributions, interest on business loans, bank service fees from incoming transfers, exchange rate fluctuations, and so on, right?

Nicole Lee6 said:Aha, okay. In that case, I think I'll follow your lead and start logging them through the UR.

So, if I'm following this logic correctly, my "expenses" category would be reserved for stuff like employee payroll summaries, self-employment tax contributions, interest on business loans, bank service fees from incoming transfers, exchange rate fluctuations, and so on, right?

fadedcrane92 said:When you're looking at interest payments on business loans—specifically if you took out a loan just to cover tax liabilities or other government debts to avoid an IRS levy—do those interest costs qualify as a deductible business expense?