Accounting for Sole Proprietors: Tax & Bookkeeping Tips

Keith Martinez5 said:So, I just submitted my tax return today... does that mean I have to go back in, fix everything, and file a whole new one? Is there still enough time left to get this sorted out before the deadline hits?

Everything can be fixed; you have until Monday.

casualorca5 said:Advance payments for dividends are recognized within the period from February 1, 2015, to February 4, 2016.

Does this also apply to sole proprietors when filing with the HHS?
I have received several conflicting answers.🤔
If anyone happens to know, thanks in advance.👍

Basically, any payments made during the calendar year would serve as a reduction against any potential interest debts 😉

Submitted my ID form about 24 hours ago.

When I went to check the form, it flagged an error stating "depreciation amount must equal purchase value times percentage..." -.

The error doesn't make sense—it's the final year of depreciation... and I've already seen people on the forum mention that you guys don't actually care about these specific errors since they're just informative and
the result is just a poorly coded tax program.

But even after a full day, my status is still showing as "processing." Every time I try to refresh the status, I get this message:
"Error refreshing status"

Did your ID form actually go through, even if you submitted it with that same informative
error?
How much longer should I be waiting for it to process? How long did it take for yours?
And what does "error refreshing status" actually mean...
Thanks for the help,

Help needed 🤦

So, I’ve been treating these self-employment incentives as earmarked funds, which is why I originally categorized them as receipts in my books.

But, while I was digging through the current tax code, I stumbled upon section

Article 7

2) Per Section 10, Item 3 of the Law, income tax does not apply to monetary compensation for temporary unemployment or inability to work paid via mandatory insurance funds, specifically:

– unemployment benefits issued by the Department of Labor under specific regulations (including monthly unemployment annuities, lump-sum payments requested by an individual to facilitate employment, self-employment, or volunteering, as well as financial aid for education or one-time assistance for travel and relocation expenses),

Does this incentive actually count as a receipt for tax purposes, or am I overthinking it? 🕺🕺

So, I just picked up a new laptop from $1500, and now I’m staring at my books wondering how the hell I'm supposed to log this as a fixed asset in the IRS system.
I'm running Synesis—does anyone know if I book it correctly, will it automatically pull into the VAT form under the "purchase of other long-term assets" section, or am I gonna have to do some manual heavy lifting?

Thanks!

Brandon Jackson4 said:Submitted my ID form about 24 hours ago.

When I went to check the form, it flagged an error stating "depreciation amount must equal purchase value times percentage..." -.

The error doesn't make sense—it's the final year of depreciation... and I've already seen people on the forum mention that you guys don't actually care about these specific errors since they're just informative and
the result is just a poorly coded tax program.

But even after a full day, my status is still showing as "processing." Every time I try to refresh the status, I get this message:
"Error refreshing status"

Did your ID form actually go through, even if you submitted it with that same informative
error?
How much longer should I be waiting for it to process? How long did it take for yours?
And what does "error refreshing status" actually mean...
Thanks for the help,

I sent mine in with the exact same error. Honestly, I don't think it'll be an issue; just print out the form along with those error messages and attach them to your tax return. You can get away with it this year because they haven't fully updated everything yet, and they said it would be fine.

I'm filing my taxes as a sole proprietor. I just got notification today that some interest from my savings account was paid out. Should I be including that interest income on this tax return?

Hello everyone, I was hoping someone could provide some guidance regarding adding a partner to my small business.
Do I need to officially terminate their current employment status within the company first?
Also, how should the payroll taxes be handled—do I calculate the full contribution amount per individual on the tax filing, or is there a different way to go about it?

Lawrence Clark2 said:Hello everyone, I was hoping someone could provide some guidance regarding adding a partner to my small business.
Do I need to officially terminate their current employment status within the company first?
Also, how should the payroll taxes be handled—do I calculate the full contribution amount per individual on the tax filing, or is there a different way to go about it?

Think of it this way: you’ll need to draft a partnership agreement that clearly outlines the percentage of profit each person is entitled to. As for the logistics, the new partner needs to register themselves with the IRS or local tax authorities as a business owner (assuming they aren't currently employed elsewhere). In your paperwork, you have to designate one person as the primary owner; since you can't list two different Social Security numbers or EINs on the same standard forms—like your tax filings or sales tax returns—everything flows through that primary identifier. Regarding those payroll taxes, it's important to understand that they aren't split proportionally. Even if you are fifty-fifty partners, you don't just pay half each; rather, the full statutory contribution amount is calculated for every single individual involved. It's like running two separate tax obligations under one umbrella structure.
Everything else follows standard accounting procedures for income and expenses. The main thing to remember is that at the end of the year, by January 31st, you file a joint information return, and then by February 28th, each partner files their own individual return based on the specific profit percentages established in that initial joint filing.

Hey, quick question—which accounts and codes should a small business owner use if they're trying to settle up those back taxes from 2015? Are we talking old school or the updated stuff? 😁

Anthony Jackson81 said:Hey, quick question—which accounts and codes should a small business owner use if they're trying to settle up those back taxes from 2015? Are we talking old school or the updated stuff? 😁

You should stick to the original billing notices, because all the associated debts are tied directly to those specific identifiers. As far as the actual routing numbers go, nothing has changed.

I could really use some help here if anyone knows the ropes. When I'm closing down my small business, should I only be reporting the bank account transactions up until the official deregistration date? Does everything after that point just get categorized as non-monetary income and expenses, or am I totally off base?

graniterider10 said:I'm filing my taxes as a sole proprietor. I just got notification today that some interest from my savings account was paid out. Should I be including that interest income on this tax return?

No, just the business income and W-2 wages, I guess.👍>

rowdyhawk25 said:I could really use some help here if anyone knows the ropes. When I'm closing down my small business, should I only be reporting the bank account transactions up until the official deregistration date? Does everything after that point just get categorized as non-monetary income and expenses, or am I totally off base?

That is exactly right. Anything that didn't pass through the business checking account prior to the closing date should be recorded as non-cash items. I actually dealt with this exact scenario for a client back in 2013, and we handled it that way for the final filings—everything was processed perfectly fine by the IRS.

Does anyone know if the Pension Fund applies to sole proprietors who are also currently employed?
My tax consultant is still drawing a blank, so I'm looking for some clarity. On some online forums, people are claiming it isn't necessary—but then I turn to page 44 of the Social Security Administration brochure, and it says it absolutely is required. It’s one of those classic "expert" contradictions that leaves you stuck in limbo.
Can anyone point me toward a reliable, actual source here? 🕺

placidlynx92 said:Does anyone know if the Pension Fund applies to sole proprietors who are also currently employed?
My tax consultant is still drawing a blank, so I'm looking for some clarity. On some online forums, people are claiming it isn't necessary—but then I turn to page 44 of the Social Security Administration brochure, and it says it absolutely is required. It’s one of those classic "expert" contradictions that leaves you stuck in limbo.
Can anyone point me toward a reliable, actual source here? 🕺

A reliable source is irrelevant if you already know contributions are only calculated once a year on your tax return.
The IRS will just "study" everything later and leave you indebted.

placidlynx92 said:Does anyone know if the Pension Fund applies to sole proprietors who are also currently employed?
My tax consultant is still drawing a blank, so I'm looking for some clarity. On some online forums, people are claiming it isn't necessary—but then I turn to page 44 of the Social Security Administration brochure, and it says it absolutely is required. It’s one of those classic "expert" contradictions that leaves you stuck in limbo.
Can anyone point me toward a reliable, actual source here? 🕺

If only she had been able to actually get through the brochure... 🙏:

Honestly, I don’t find Reddit to be a reliable source at all.
I got two completely different answers regarding my question—one person told me no, but then the IRS told me yes.
To be perfectly honest—and I hate to be the one to say it—I’m feeling pretty skeptical about them.

As far as I know, that contribution to the Pension Fund needs to be submitted by the same deadline as the final tax return filing.

I’m just sitting here reading up on the latest info regarding the winners. According to what I'm seeing from the IRS, they don't actually submit the Pension Fund details—mostly because those contributions are already accounted for under the debts listed in the tax forms.

It’s one thing when the IRS says one thing, but then you hear something completely different from the tax professionals—it honestly makes you wonder who's actually keeping track of the rules.
Man, this whole situation is just pure madness.

Jessica Gonzalez30 said:If only she had been able to actually get through the brochure... 🙏:

Honestly, I don’t find Reddit to be a reliable source at all.
I got two completely different answers regarding my question—one person told me no, but then the IRS told me yes.
To be perfectly honest—and I hate to be the one to say it—I’m feeling pretty skeptical about them.

As far as I know, that contribution to the Pension Fund needs to be submitted by the same deadline as the final tax return filing.

I’m just sitting here reading up on the latest info regarding the winners. According to what I'm seeing from the IRS, they don't actually submit the Pension Fund details—mostly because those contributions are already accounted for under the debts listed in the tax forms.

It’s one thing when the IRS says one thing, but then you hear something completely different from the tax professionals—it honestly makes you wonder who's actually keeping track of the rules.
Man, this whole situation is just pure madness.

Whatever, I'll just send it in. If it gets rejected under those specific codes, then I guess it wasn't supposed to happen in the first place.🤣🤣🤣🤣

placidlynx92 said:Whatever, I'll just send it in. If it gets rejected under those specific codes, then I guess it wasn't supposed to happen in the first place.🤣🤣🤣🤣

A Colleague mentioned they actually called the Federal Reserve, and honestly, the folks on the other end were acting totally baffled, asking where they'd even gotten the idea to send funds to a non-profit organization.

To be honest, I'm really not sure what else to tell you. 👎

Jessica Gonzalez30 said:Help needed 🤦

So, I’ve been treating these self-employment incentives as earmarked funds, which is why I originally categorized them as receipts in my books.

But, while I was digging through the current tax code, I stumbled upon section

Article 7

2) Per Section 10, Item 3 of the Law, income tax does not apply to monetary compensation for temporary unemployment or inability to work paid via mandatory insurance funds, specifically:

– unemployment benefits issued by the Department of Labor under specific regulations (including monthly unemployment annuities, lump-sum payments requested by an individual to facilitate employment, self-employment, or volunteering, as well as financial aid for education or one-time assistance for travel and relocation expenses),

Does this incentive actually count as a receipt for tax purposes, or am I overthinking it? 🕺🕺

If you received incentives specifically intended to encourage self-employment—meaning they are earmarked—then those funds are subject to income tax and should be included in the receipts within your Key Performance Indicator.