Accounting for Sole Proprietors: Tax & Bookkeeping Tips

Brenda Chase3 said:We're all still waiting on updates; we will post as soon as we hear anything. 😉

That’s actually been in the Rulebook (and consequently the codebases) for a while now; it just officially went into effect on January 1st, 2016.

Keith Martinez5 said:Hey everyone! Quick question—could someone clarify which label I should use for "recipient" versus "income" when dealing with a sole proprietor's earnings? I'm trying to get everything squared away while setting up a Sole Proprietorship file in the new module over at Sinesys LLC. Thanks so much!

I haven't even received a quote for the new Small Business setup yet.🙄

Richard Howard55 said:I assume you mean the Non-profit organization document.

Taxpayer code: 0041 through 0046
Income code: 5801 through 5807

The new setup won't let me enter any codes other than the ones listed above.

Thanks, 🙂

Keith Martinez5 said:Wait, does that imply I still have to pay sales tax on those specific invoices? Since they’re being recorded as receipts, I'm wondering if I'm on the hook for the tax even though I never actually collected any cash—or did I totally miss the mark on how this works?

From what little I can gather—if a company is bankrupt, undergoing liquidation, or just wiped from the Secretary of State records and won't pay up, it isn't treated as income for the KPI!
I'm not sure if that applies to the statute of limitations on individual clients versus corporate ones, though I highly doubt anyone is actually going to settle an invoice from 2010.
And honestly, why would anyone even book those invoices as income and pay sales tax on money we're never going to see?

Seriously though, do unpaid invoices actually count as receipts? And am I supposed to be paying sales tax on them? Since 2012, I’ve been sitting on a claim for about $150 from this small business that shut down back in 2013. We never filed a lawsuit or anything; it’s just this lingering debt hanging over my head. I really want to clear this off the books. If I don't even have to list it under receipts—well, that would be amazing. But I really need to be sure.

Hey everyone!
So, starting January 1st, 2016, my small business is dropping out of the sales tax system. Now I'm stuck trying to figure out how to handle the input tax adjustment for some equipment I bought back in August 2011... and honestly, my head is spinning. What trips me up is whether I should just count 2011 as a full year of usage—which would mean it's already been used for five solid years and I don't need to touch anything—or if I have to get all granular and do this on a month-by-month basis. Like, if the machine has actually only been running for four years and four months, do I still have to calculate an adjustment for those remaining eight months? This is such a headache...

amberbadger17 said:Seriously though, do unpaid invoices actually count as receipts? And am I supposed to be paying sales tax on them? Since 2012, I’ve been sitting on a claim for about $150 from this small business that shut down back in 2013. We never filed a lawsuit or anything; it’s just this lingering debt hanging over my head. I really want to clear this off the books. If I don't even have to list it under receipts—well, that would be amazing. But I really need to be sure.

So, I went to see my consultant, and they told me that regardless of the statute of limitations or whether those companies were wiped from the corporate registry during bankruptcy or liquidation, we still have to track these as unpaid receivables. Apparently, they have to show up on this new reporting form because we never took legal action (basically all unpaid invoices from the last six years)... It's total absurdity, honestly...
I even had a woman confirm this at a seminar yesterday...
The only real headache is if the business itself closes down; then we might be on the hook for the sales tax, even though we never actually collected a dime from the client. So, I guess the move is to not include them as receipts and just leave things as they are!

cosmictinker24 said:So, I went to see my consultant, and they told me that regardless of the statute of limitations or whether those companies were wiped from the corporate registry during bankruptcy or liquidation, we still have to track these as unpaid receivables. Apparently, they have to show up on this new reporting form because we never took legal action (basically all unpaid invoices from the last six years)... It's total absurdity, honestly...
I even had a woman confirm this at a seminar yesterday...
The only real headache is if the business itself closes down; then we might be on the hook for the sales tax, even though we never actually collected a dime from the client. So, I guess the move is to not include them as receipts and just leave things as they are!

But who are you supposed to sue if you didn't even know the company had already folded? Honestly, if it's bothering you, I'd just move it to receipts and call it a day—because if you ever decide to clear out all the old unpaid stuff during closing, it's going into receipts anyway.🍿

Or just roll with it and put it in the OPZ-STAT, 🙂

Carol Price4 said:But who are you supposed to sue if you didn't even know the company had already folded? Honestly, if it's bothering you, I'd just move it to receipts and call it a day—because if you ever decide to clear out all the old unpaid stuff during closing, it's going into receipts anyway.🍿

Or just roll with it and put it in the OPZ-STAT, 🙂

Yeah, I get it...
But honestly, dragging yourself through a lawsuit just to rack up legal fees when you'll likely never see a dime? It seems pretty pointless to me.
We all know how it goes these days—most of these businesses are barely keeping their heads above water, struggling just to cover payroll, let alone anything else...

Carol Price4 said:But who are you supposed to sue if you didn't even know the company had already folded? Honestly, if it's bothering you, I'd just move it to receipts and call it a day—because if you ever decide to clear out all the old unpaid stuff during closing, it's going into receipts anyway.🍿

Or just roll with it and put it in the OPZ-STAT, 🙂

You make a fair point—at the end of the day, we’ll all have to pay our taxes regardless—but the sheer absurdity of the situation is what drives me absolutely crazy. I actually had a situation once where I rang up a customer at a roadside diner (this was back before digital transaction tracking was standard everywhere)... he told me he was heading to an ATM to grab cash, and he just never showed back up. Since the guy was from my own hometown, I didn't even think twice about it at the time... We went through the whole process of getting a legal judgment and filing it with the IRS, but we never saw a dime. In cases like that, should you just record it as income too?🤷

I’ve decided I’m just going to cut my losses. I'll write off those unpaid invoices, settle the sales tax, and call it a day. I don't want this hanging over my head, and honestly, I really can't be bothered to file paperwork for money that’s never actually hitting my bank account.

Whatever, it’s just the cost of doing business. Like they say in those business school textbooks: you haven't actually made the sale until the cash is in the bag. My bad.

ruggedlynx63 said:Just to add some more context here... The new account numbers for small business owners to make their contribution payments are as follows:
8230 - Social Security 1st tier
2330 - Social Security 2nd tier
8605 - Unemployment Insurance
8796 - Employment Tax Credit
8133 - Workers' Comp Contributions

Like account12345 mentioned, we're still waiting on the official word regarding reporting methods, specific examples, and the rest of the fine print, so we'll pick this back up once that hits our desks... 🙂

1.) If I'm reading this right, these new codes don't kick in until month two, and they'll be tied to the FBI filing... right?
2.) For December 2015, we just use the old payment code like usual, without the FBI filing. 🤔

3.) What's the deal with tax withholdings?
Does that go straight onto the FBI filing next month, or what? And if it does, how do we fill out the FBI form—did the payment codes change for that too, or is it business as usual? 🤷
Or does the FBI filing only happen after the tax return is filed and the new assessment hits three months later? 🤔

P.S. I hope they haven't cooked up some plan to include sales tax in the FBI filing too. Haven't heard anything about it, but honestly, given the nonsense they've been pulling lately, I wouldn't put it past them. 😬

stormybadger8 said:1.) If I'm reading this right, these new codes don't kick in until month two, and they'll be tied to the FBI filing... right?
2.) For December 2015, we just use the old payment code like usual, without the FBI filing. 🤔

3.) What's the deal with tax withholdings?
Does that go straight onto the FBI filing next month, or what? And if it does, how do we fill out the FBI form—did the payment codes change for that too, or is it business as usual? 🤷
Or does the FBI filing only happen after the tax return is filed and the new assessment hits three months later? 🤔

P.S. I hope they haven't cooked up some plan to include sales tax in the FBI filing too. Haven't heard anything about it, but honestly, given the nonsense they've been pulling lately, I wouldn't put it past them. 😬

1. Yes, that's correct.
2. Yes, that's right.
3. It happens after the tax return is filed, because you won't actually know your total withholding amount until you finish that return.

P.S. They haven't done that yet, but hey, why would we be surprised if they eventually do?

Brenda Chase3 said:1. Yes, that's correct.
2. Yes, that's right.
3. It happens after the tax return is filed, because you won't actually know your total withholding amount until you finish that return.

P.S. They haven't done that yet, but hey, why would we be surprised if they eventually do?

Thanks for the info. 🙂

Only one thing still isn't clicking for me...

3. So, do I still need to pay the income and local tax withholdings for months 1 and 2 based on my current paperwork, or skip it?🤔

P.S. Just sitting here eagerly waiting for all the changes the new administration is going to roll out.🎉

The business owns a personal vehicle, and we currently deduct 70% of all related expenses. Does the owner need to report any kind of fringe benefit or imputed income for using the car for personal trips?
If I wanted to move the car out of the business's name, but it's already been fully depreciated, how would that process work?

John Price92 said:Hey everyone!
So, starting January 1st, 2016, my small business is dropping out of the sales tax system. Now I'm stuck trying to figure out how to handle the input tax adjustment for some equipment I bought back in August 2011... and honestly, my head is spinning. What trips me up is whether I should just count 2011 as a full year of usage—which would mean it's already been used for five solid years and I don't need to touch anything—or if I have to get all granular and do this on a month-by-month basis. Like, if the machine has actually only been running for four years and four months, do I still have to calculate an adjustment for those remaining eight months? This is such a headache...

You count the entire year. Pretty sure that was settled in the latest updates to the tax regulations, so there shouldn't be any need for an adjustment.

Hey, can anyone help me out? How do I book a prepaid tax correction so it actually shows up in the prepaid tax adjustments section? I'm using Synesis.

ruggedlynx63 said:Man, I just realized I posted this in the Sole Proprietors thread... my bad. Given that, just ignore what I said earlier about "booking to the down payment account and then clearing it against account 220"😁
At any rate, they absolutely have to issue you an invoice for that deposit

So here’s my current headache. They sent over a quote, but it shows the total amount for everything, not just the deposit I already paid.
I sent the payment on $67 December 16th to the bank account info they emailed me, and I honestly thought I'd get a confirmation once it cleared... but nope. Now I'm looking for something specific... right now... and all I've got is this quote from December 24th showing the full price for the seminar, which doesn't happen until February 20th when I pay the rest and finally get my reimbursement.
How on earth am I supposed to book all of this?

Robin Cook4 said:Hey, can anyone help me out? How do I book a prepaid tax correction so it actually shows up in the prepaid tax adjustments section? I'm using Synesis.

The final sales tax return—specifically the adjustment filing—isn't submitted as a standalone thing anymore. Instead, you just include any necessary corrections within that final period's filing, like the 12/2015 report, to ensure everything reconciles perfectly for the entire fiscal year.

Hey, I could use a little help here. I'm looking at a small business owner who paid an invoice to a major corporation for more than $1667, but they used their personal checking account to do it. Can I actually record this in the business books for just the amount up to $1667?