Accounting for Sole Proprietors: Tax & Bookkeeping Tips

So, I’ve got this small business client who realized they accidentally paid the exact same invoice twice back in May 2015. They just caught the error and sent the overpayment back today... which obviously creates a bit of a headache because, well, they already booked both payments as separate transactions back in May. Now I'm trying to figure out the cleanest way to show this in the books—how should I handle the adjustment? Is there a way to fix this through the final sales tax return, or am I looking at something more complicated?...

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.

So, here is how I handled it: when I was running the calculations for December, I just entered the amount I still owed as a negative value directly into the Withholding Tax Adjustments field. That way, the system automatically factored it into my total tax liability for the month.

Sam Foster7 said:So, I’ve got this small business client who realized they accidentally paid the exact same invoice twice back in May 2015. They just caught the error and sent the overpayment back today... which obviously creates a bit of a headache because, well, they already booked both payments as separate transactions back in May. Now I'm trying to figure out the cleanest way to show this in the books—how should I handle the adjustment? Is there a way to fix this through the final sales tax return, or am I looking at something more complicated?...

Just void that invoice in the December 2015 period and adjust everything through the December 2015 sales tax return.

So, I just installed the new business module in Synapse—it’s got this PPI form, though I don't really see the point since it looks identical to the old recap.kpi, but whatever...
I tried plugging in all the owner info and tax codes to run a test JOPPD for January's contributions—set for February 15th—just to see how it handles, but whenever I try to save the file once it opens, I keep getting an "invalid control number" error..
Any idea where I'm messing up?

Brenda Chase3 said:Just void that invoice in the December 2015 period and adjust everything through the December 2015 sales tax return.

Could someone walk me through how that would actually look? I mean... how am I supposed to void an invoice that wasn't even officially issued yet? I'm honestly a bit stumped on the execution part... My only thought was to just reduce the total sales tax liability for the December 2015 filing by that amount. But then I wonder—would I need to send some kind of explanation to the IRS since it’ll create a discrepancy in my total annual turnover figures?...

Sam Foster7 said:Could someone walk me through how that would actually look? I mean... how am I supposed to void an invoice that wasn't even officially issued yet? I'm honestly a bit stumped on the execution part... My only thought was to just reduce the total sales tax liability for the December 2015 filing by that amount. But then I wonder—would I need to send some kind of explanation to the IRS since it’ll create a discrepancy in my total annual turnover figures?...

Wait, let's clear this up... did you end up recording both invoices in May, or did you skip them entirely? You mentioned that both were booked, which implies that the same invoice was issued twice and recorded as such. If that's the case, one of them definitely needs to be voided, assuming the money has already been refunded to the client. It sounds like the actual sequence of events wasn't quite explained clearly enough.

Brenda Chase3 said:Wait, let's clear this up... did you end up recording both invoices in May, or did you skip them entirely? You mentioned that both were booked, which implies that the same invoice was issued twice and recorded as such. If that's the case, one of them definitely needs to be voided, assuming the money has already been refunded to the client. It sounds like the actual sequence of events wasn't quite explained clearly enough.

My bad, I definitely phrased that poorly—what I meant was there’s just one single invoice that ended up being paid twice, even though only one was ever issued. And yeah, he went ahead and recorded both those incoming payments against that one lone invoice. Hopefully, that clears things up a bit better...

Sam Foster7 said:My bad, I definitely phrased that poorly—what I meant was there’s just one single invoice that ended up being paid twice, even though only one was ever issued. And yeah, he went ahead and recorded both those incoming payments against that one lone invoice. Hopefully, that clears things up a bit better...

If he counted it twice for sales tax purposes, then you should just reduce the liability for the December 2015 period by that one extra payment. Honestly, though, I’m still struggling to wrap my head around how he logged two separate payments if there was only one invoice to begin with. How can you close out the exact same invoice twice if it was only generated once? Is this being handled within the KPI, the IRA, or just via the sales tax return during the calculation phase...

Brenda Chase3 said:If he counted it twice for sales tax purposes, then you should just reduce the liability for the December 2015 period by that one extra payment. Honestly, though, I’m still struggling to wrap my head around how he logged two separate payments if there was only one invoice to begin with. How can you close out the exact same invoice twice if it was only generated once? Is this being handled within the KPI, the IRA, or just via the sales tax return during the calculation phase...

It doesn't make sense to me either—he mentioned he was tracking the bank statements instead of the actual invoices... 🤦 He closed it out in both the KPI and the IRA, which then trickled down into the sales tax return.

Sam Foster7 said:It doesn't make sense to me either—he mentioned he was tracking the bank statements instead of the actual invoices... 🤦 He closed it out in both the KPI and the IRA, which then trickled down into the sales tax return.

Look, if this somehow got processed through the IRA and the KPI twice, your best bet is to just record a reversal entry in your books during December. You don't need to send a credit memo to the client since they didn't actually issue two separate invoices; you just need to correct the double-entry in your own accounting software.
It's hard for me to walk you through the technical specifics because I'm not sure how your specific software handles these workflows. In my setup, for instance, the system won't even let you close out an IRA a second time once it's finalized, unless someone accidentally generates a duplicate invoice by mistake.

As far as I know, you can just log it in Pupil as being paid twice. If you're running a business where you pay sales tax based on actual receipts, the system will just pull that straight into the tax return...

And then down at the bottom, it’ll show something like "balance due" -5.$0.00...

I think I ran into something similar once🤔
but I realized fast enough that I'd totally messed up the numbers...

Looking for some clarification here.

If an invoice doesn't explicitly state a due date—basically, when is it officially considered overdue?

Does that timeline change depending on whether the bill is sent to a business or just a regular individual?

Also, regarding this new IRS form... is it filed electronically through the standard portal, or does it go somewhere else?

One more thing: what happens if the recipient was an individual back in the day who only had a Social Security number on file (back before everyone had a specific taxpayer ID, around 2009 or 2010)?

Thanks,

Brandon Jackson4 said:Looking for some clarification here.

If an invoice doesn't explicitly state a due date—basically, when is it officially considered overdue?

Does that timeline change depending on whether the bill is sent to a business or just a regular individual?

Also, regarding this new IRS form... is it filed electronically through the standard portal, or does it go somewhere else?

One more thing: what happens if the recipient was an individual back in the day who only had a Social Security number on file (back before everyone had a specific taxpayer ID, around 2009 or 2010)?

Thanks,

If there's no due date listed, it's generally considered due 30 days after the issue date.

You'll send that specific tax form over via the IRS e-file system.

As for those old invoices from 2009—you don't even need to worry about reporting them. You only have to report stuff going back six years, so anything from January 2010 onwards is what matters.

I purchased a lathe back in December. Do I need to report this on my sales tax return under section VIII. 1.4?

Guys, I seriously need some help here!

So, I’m trying to settle some VAT differences from previous years where the numbers just aren't adding up. Basically, my pro forma invoice was set at 23%, but the actual invoice came out at 25%, so now I'm staring at this annoying VAT discrepancy...
If I manually enter the amount I still owe into the December period under the "VAT Adjustments" section—using a negative sign in front of the amount—it adds the total to my December liabilities. That part works fine, but for some reason, the extra VAT paid isn't showing up correctly in the KPI recapitulation. It’s like the math is working one way but the report isn't reflecting it properly.
The headache is that I can't figure out how to close it out by just listing that specific VAT amount under "In-Kind Supplies"...??
I have no clue how to balance this without it popping up in the OPZ-STAT reports. If it shows up there, nobody is going to pay me back because these invoices were issued to individuals, not businesses. They aren't going to cut me a check for an error like this!
If anyone has dealt with this mess before, please, please let me know!

I’ve got an advance payment for an operating lease through my small business.
I was just wondering—does that go under the same KPI?

I have a small business owner who back in 2015 collected some income from his family farm. Since the farm isn't registered for sales tax, he doesn't keep formal books for it. What I’m trying to figure out is whether I should list that farm income separately under section 4.2.1 (for instance, right underneath the sole proprietorship income), or if I should just bundle everything together, provide a total sum alongside the business recap, and then include a note explaining that the farm income was included in that total.
I read somewhere that for a family farm, you basically just subtract expenses from receipts and report that net amount on the tax return, but I’m stuck on whether it needs its own line item or if it can be lumped in with the main business earnings. Thanks!

Carol Price4 said:If there's no due date listed, it's generally considered due 30 days after the issue date.

You'll send that specific tax form over via the IRS e-file system.

As for those old invoices from 2009—you don't even need to worry about reporting them. You only have to report stuff going back six years, so anything from January 2010 onwards is what matters.

Carol Price4,
here’s an instruction I found on the IRS website:

It states there's an obligation to report all receivables that aren't older than 6 years.
Specifically, for the initial reporting regarding outstanding unpaid receivables as of December 31st...
for the year 2015, this includes all overdue, unpaid amounts that became due for collection after December 31st...
2009. In other words, those due from January 1st, 2010, and beyond.

Based on this from the IRS, my take is that all 2009 invoices fall in if they are due after 12/31/2009... like an invoice dated Dec 20, 2009, that isn't due until Jan 15, 2010.
What's your thoughts on this?

Brandon Jackson4 said:Carol Price4,
here’s an instruction I found on the IRS website:

It states there's an obligation to report all receivables that aren't older than 6 years.
Specifically, for the initial reporting regarding outstanding unpaid receivables as of December 31st...
for the year 2015, this includes all overdue, unpaid amounts that became due for collection after December 31st...
2009. In other words, those due from January 1st, 2010, and beyond.

Based on this from the IRS, my take is that all 2009 invoices fall in if they are due after 12/31/2009... like an invoice dated Dec 20, 2009, that isn't due until Jan 15, 2010.
What's your thoughts on this?

Yeah, it says "due" rather than "issued"—just like I mentioned earlier—but honestly, any debt older than six years should be written off regardless of how you slice it. Per accounting standards, if you haven't written them off by then, you're just presenting a totally unrealistic picture of the company... so...

Brenda Chase3 said:I have a small business owner who back in 2015 collected some income from his family farm. Since the farm isn't registered for sales tax, he doesn't keep formal books for it. What I’m trying to figure out is whether I should list that farm income separately under section 4.2.1 (for instance, right underneath the sole proprietorship income), or if I should just bundle everything together, provide a total sum alongside the business recap, and then include a note explaining that the farm income was included in that total.
I read somewhere that for a family farm, you basically just subtract expenses from receipts and report that net amount on the tax return, but I’m stuck on whether it needs its own line item or if it can be lumped in with the main business earnings. Thanks!

In case anyone else is wondering about this, I can weigh in. Tax advisors suggest that if the annual farm income stays below $27, there is actually no need to report it anywhere at all, because you aren't liable for income tax on farm earnings up to that threshold.

"Income tax is due if the total value of taxable goods delivered and services performed in the previous year exceeded $76667 (for those subject to sales tax); if the total annual income from agricultural and forestry activities in the previous calendar year exceeded $26833, which is 35% of the threshold for mandatory sales tax registration; if subsidies are received according to the terms set forth in the Farm Bill; or if the individual performing the agricultural or forestry activity chooses to voluntarily register as an income tax payer."