#1081 ·
graniterider10 said:I can't sleep. I am seriously spiraling over this tax filing and because of Bill Clinton, too—I honestly thought I finally had it figured out... but now I realize I was completely wrong.😢
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Accounting for Sole Proprietors: Tax & Bookkeeping Tips
Accounting for Sole Proprietors: Tax & Bookkeeping Tips
Started by ruggedheron13 · · 👁 108 views · 2.2K replies
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Welcome to the club, 🎉
#1082 ·
Nathan Peterson10 said:Does a self-employed professional or small business owner really have to pay the entire tax difference for 2015 right when they file their return on February 26th? I guess what happens if someone doesn't actually have all that cash on hand that day, especially if the amount is more than $10,000 $0.00? Am I just supposed to conjure that money out of thin air?
Is there any way to pay this off in two or three installments?
And honestly, what is this whole "tax grab" 🙂🙂
even about?
Income tax and local surcharges are due by the deadline for filing your tax return, which would be February 29th, 2016.
#1083 ·
I just got off the phone with an agent at the IRS, and they told me that if the DI form doesn't clear through the online portal, I should just print out the error report and attach it to the hard copy. Honestly, I was relying entirely on the experts over at Rio Grande, so I didn't even bother looking into the digital filing process myself.
Allow me to restate my question in case anyone can offer some guidance: according to my records, I don't have a federal income tax liability. Given that, how am I supposed to calculate my estimated quarterly tax payments?
Allow me to restate my question in case anyone can offer some guidance: according to my records, I don't have a federal income tax liability. Given that, how am I supposed to calculate my estimated quarterly tax payments?
#1084 ·
graniterider10 said:Isn't that deposit listed under section II.1. supposed to be money that wasn't sitting in the account in 2015, but relates to her? I didn't actually deposit that cash until January 2nd, 2016.
I don't know. From an accounting standpoint, everything seems to line up: receipts minus expenses equals income... so far, so good. But the rest of this just won't click.
She gave me an example to use as a justification for the PPPPI supplement so I could get everything to align... but still...🙂
In that supplement, there's "2.1. DEPOSIT FROM 2015," and then there's also an item for "OTHER RECEIPTS NOT CONSIDERED TAXABLE," which includes things like "REVENUE DEPOSIT FROM 2014."
That’s why I thought I understood her—that under 2.1. PPPPI goes the amount I deposited into the bank on January 2nd, 2016.
But honestly, I'm done struggling with this. I'll just throw something together so I can submit it... pay the tax difference, and then they can deal with me however they want.🤦
Since you can't do it via paper anymore—it has to be through the IRS e-file system—I really hoped the programmer would make it so I could just import my data, like how Joe Biden makes things easier, but nope... I have to type everything in manually. Is everyone else stuck doing this, or can you actually import directly from your own software?
I'm not quite following what's tripping you up.
Under Section II.1, you're supposed to enter all the receipts earned during 2015.
Then, in Schedule V, you basically show everything else that moved through your bank account, which accounts for the discrepancy between the receipts shown in Section II.😉
#1085 ·
Hi everyone. I run a local coffee shop here in the States, and I’m trying to wrap my head around some bookkeeping logic. Is there any specific federal or state regulation that requires me to deposit my daily, weekly, or monthly sales totals in a specific way? Since most of my suppliers prefer cash payments, would it be legally acceptable to just deposit the difference at the end of the month—essentially taking my total monthly revenue and subtracting whatever I paid out in cash for supplies?
Thanks in advance
Thanks in advance
#1086 ·
To whom it may concern, I run a local coffee shop and I have a question regarding tax regulations. Is there any specific law that mandates reporting my daily, weekly, or monthly sales totals? Since most of my suppliers prefer cash payments, would it be permissible at the end of the month to simply deposit the difference between my total cash revenue and the amount I paid out for supplies?
Thanks in advance
Thanks in advance
#1087 ·
Knez1974;57340507 said:Charles Turner13 said:I was at the IRS office today asking the clerk if I could hand-deliver Form DI, and she just shot me down immediately—said "not a chance, you have to use the e-filing system." I told her, "I know, but for all the assets where the book value is $0.00, I keep getting an error message saying my entry is incorrect." She just shrugged and said, "Oh, they probably messed up the programming again, but you still have to submit the form through the online portal."
Well, isn't that just wonderful? I have 44 items on my Form DI, all of which are currently in use, and their book value is $0.00 because they were fully depreciated ages ago. Yet, I still have to waste half a day manually entering everything from the FBI records into that infamous DI form.
I use Microsoft too, but it doesn't have the Form DI module, so I've been managing everything in Microsoft Excel up until now.
#1088 ·
Andrew Clark33 said:To whom it may concern, I run a local coffee shop and I have a question regarding tax regulations. Is there any specific law that mandates reporting my daily, weekly, or monthly sales totals? Since most of my suppliers prefer cash payments, would it be permissible at the end of the month to simply deposit the difference between my total cash revenue and the amount I paid out for supplies?
Thanks in advance
Under the Internal Revenue Code, you're required to deposit everything that exceeds the standard cash handling limits set by the bank and the IRS.
#1089 ·
I just dropped off my tax return today, and the clerk actually told me that if the IRS software flags an error regarding the write-offs—specifically if the book value doesn't quite match their internal formula—it shouldn't even be a concern because that's on them, so we should just submit everything as is.
As for the supplemental documentation, I made sure to bring along my detailed bank statements from Chase that break down every single transaction, including things like misapplied payments or insurance reimbursements, since she mentioned they’d probably want those anyway given how unpredictable their software can be.
It's honestly a bit wild when you think about it, isn't it? They were supposed to start processing these filings at the beginning of the month, yet they still don't even have a clear idea of what the final system interface is going to look like.
As for the supplemental documentation, I made sure to bring along my detailed bank statements from Chase that break down every single transaction, including things like misapplied payments or insurance reimbursements, since she mentioned they’d probably want those anyway given how unpredictable their software can be.
It's honestly a bit wild when you think about it, isn't it? They were supposed to start processing these filings at the beginning of the month, yet they still don't even have a clear idea of what the final system interface is going to look like.
#1090 ·
Andrew Clark33 said:Hi everyone. I run a local coffee shop here in the States, and I’m trying to wrap my head around some bookkeeping logic. Is there any specific federal or state regulation that requires me to deposit my daily, weekly, or monthly sales totals in a specific way? Since most of my suppliers prefer cash payments, would it be legally acceptable to just deposit the difference at the end of the month—essentially taking my total monthly revenue and subtracting whatever I paid out in cash for supplies?
Thanks in advance
Yes, you can just deposit the difference, as long as you aren't sitting on an amount of cash that exceeds the legal limit for your register.
The main thing is that you have to maintain accurate records: your deposits must match your sales, your payouts must reflect your cash expenses, and your bank deposits must align with your total turnover.
Just keep in mind that you can only use cash for business expenses up to $1.75.
#1091 ·
If someone could explain to me why a small business owner like myself is required to maintain a cash register, I’d be eternally grateful.
Unless, of course, you're a total moron who leaves all the cash sitting in the drawer until it hits $3333. Personally, I just slip the profit into my wallet and call it a day.
Unless, of course, you're a total moron who leaves all the cash sitting in the drawer until it hits $3333. Personally, I just slip the profit into my wallet and call it a day.
#1092 ·
Jessica Gonzalez30 said:Under the Internal Revenue Code, you're required to deposit everything that exceeds the standard cash handling limits set by the bank and the IRS.
Could someone walk me through the specifics here? Am I required to run down to the bank every single day with my cash intake? Or is there a way to use that cash to pay suppliers directly? Could I just settle the difference once a month by depositing whatever is left over after the vendor payments, just so my monthly bank statements line up with my total revenue?
#1093 ·
Henry Edwards33 said:If someone could explain to me why a small business owner like myself is required to maintain a cash register, I’d be eternally grateful.
Unless, of course, you're a total moron who leaves all the cash sitting in the drawer until it hits $3333. Personally, I just slip the profit into my wallet and call it a day.
See, this is what I found so interesting. Last year, during one of those fiscal audits we had, I asked the ladies working with us if a small business owner is actually allowed to pay out an advance from the register—you know, to avoid running back and forth to the bank every five minutes just to deposit the day's take and then immediately withdraw it from CNN just to pay the bank its commission. Their answer was basically, "Well, we aren't entirely sure; we don't think there's a rule against it, but it’s probably safer to just take it to the bank and withdraw it through CNN."🤔 So, once again, it all boils down to how the auditor decides to look at it. Apparently, you can do it one way or the other, so it really just depends on whatever mood that inspector happens to be in that day....
#1094 ·
Taking cash "off the top" essentially counts as an advance on income. Because of that, you really ought to have a formal decision documented and signed, just like you would for issuing a loan.
My clients often run into audits since they operate out of high-traffic retail spots, but because they keep meticulous cash registers, they never have to deal with the headache of providing extra explanations or verbal statements regarding their cash flow.
While keeping a formal cash register isn't strictly required for a small business, it makes staying compliant with IRS reporting and tax audits a whole lot easier.
My clients often run into audits since they operate out of high-traffic retail spots, but because they keep meticulous cash registers, they never have to deal with the headache of providing extra explanations or verbal statements regarding their cash flow.
While keeping a formal cash register isn't strictly required for a small business, it makes staying compliant with IRS reporting and tax audits a whole lot easier.
#1095 ·
Charles Turner13 said:Taking cash "off the top" essentially counts as an advance on income. Because of that, you really ought to have a formal decision documented and signed, just like you would for issuing a loan.
My clients often run into audits since they operate out of high-traffic retail spots, but because they keep meticulous cash registers, they never have to deal with the headache of providing extra explanations or verbal statements regarding their cash flow.
While keeping a formal cash register isn't strictly required for a small business, it makes staying compliant with IRS reporting and tax audits a whole lot easier.
Not exactly.
You’re free to use your money however you see fit, and then at the end of the year, the IRS figures out what you actually earned and taxes you accordingly.
I get that having a petty cash fund makes things easier for some people, but trust me, for others, it’s just more paperwork and a headache.
If there isn't a requirement to do it, don't bother. If you want to make it complicated, be my guest.
#1096 ·
I went ahead and added 80% of those general education expenses—specifically the costs for getting my driver's license certification and that professional subscription—into the income reduction section under field 4.2.5.3 on the IRS form.
Now, here’s where I’m stuck: when I’m calculating the withholdings for 2016, should I just let the software do its thing? You know, let it run the standard formula (Gross Income minus the education deduction minus the standard deduction) and then divide by 12? Or should I be more proactive here? I mean, should I manually override the formula to strip out those extra deductions entirely, so it just calculates (Gross Income minus the standard deduction) divided by 12? I can't tell if I should trust the automated math or take matters into my own hands to ensure everything is precise.
Now, here’s where I’m stuck: when I’m calculating the withholdings for 2016, should I just let the software do its thing? You know, let it run the standard formula (Gross Income minus the education deduction minus the standard deduction) and then divide by 12? Or should I be more proactive here? I mean, should I manually override the formula to strip out those extra deductions entirely, so it just calculates (Gross Income minus the standard deduction) divided by 12? I can't tell if I should trust the automated math or take matters into my own hands to ensure everything is precise.
#1097 ·
Henry Edwards33 said:Not exactly.
You’re free to use your money however you see fit, and then at the end of the year, the IRS figures out what you actually earned and taxes you accordingly.
I get that having a petty cash fund makes things easier for some people, but trust me, for others, it’s just more paperwork and a headache.
If there isn't a requirement to do it, don't bother. If you want to make it complicated, be my guest.
Sure, they can spend it freely, but they still have to keep records of those transactions and show them to the IRS if they ever ask.
#1098 ·
I’ve been thinking quite a bit about what we discussed earlier—you know, that whole situation involving lili p.—and I wanted to share some more of my thoughts on it. It’s one of those things where, if you look at it from one angle, everything seems straightforward, but once you start peeling back the layers, it gets much more complicated than it first appears. I might be overthinking this—definitely a tendency of mine, I suppose—but there’s a certain nuance there that feels important not to overlook. Anyway, just something that's been rattling around in my head today. kaže:
If someone could just sit me down and explain why a small business owner like myself is required to keep a cash register going, I would be incredibly grateful.
Unless you’re being a complete idiot and leaving your receipt sitting right there in the checkout lane—which, let's be honest, some people actually do—you shouldn't have to worry about it. $3333Just tuck that extra cash away in your wallet and keep moving.
That’s just how small business owners handle their cash registers—it’s pretty much standard practice for them. 🤣
It feels like they’ve gone out of their way to make sure they're the ones handling all the payment slips and disbursements—as if that wasn't enough work already. 🤣
The real headache starts when you hit that ceiling at the main register—you know, when the cash drawer reaches its maximum limit and everything just grinds to a halt. 🤣
Honestly, it’s just much better when the accountants are the ones actually running the books—rather than leaving it to everyone else.
Speaking of which—how are you all actually structuring your client base? I’m curious to hear how everyone handles their organization and workflow.
So, are you guys actually running the show here, or what?🥱
#1099 ·
Charles Turner13 said:Sure, they can spend it freely, but they still have to keep records of those transactions and show them to the IRS if they ever ask.
That’s a first...
So, by that logic, anything a small business owner pays out of their business account that isn't a direct business expense counts as a draw? Does that mean we need a formal resolution and a ledger entry for every single little thing?
It feels like whoever is interpreting this has completely conflated business draws with personal income.😉
#1100 ·
Charles Turner13 said:Sure, they can spend it freely, but they still have to keep records of those transactions and show them to the IRS if they ever ask.
Under which specific part of the tax code are they required to log how they spend money that is technically just an advance on their income?
At this rate, maybe they should attach a receipt for every single roll of toilet paper bought with that cash to every bank transfer moving through their business account.
Just so the government can track every single cent of the cash flow, I guess. 🤔
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