Accounting for Sole Proprietors: Tax & Bookkeeping Tips

The IRS is about to drop those new tax solutions on us.

I haven’t really been keeping up with all the news lately—specifically since those health insurance premium hikes started kicking in—so I’m feeling a little out of the loop. Has anyone else heard anything yet? I still haven't received any official notice in my mailbox or via email.

Keith Martinez5 said:I haven’t really been keeping up with all the news lately—specifically since those health insurance premium hikes started kicking in—so I’m feeling a little out of the loop. Has anyone else heard anything yet? I still haven't received any official notice in my mailbox or via email.

The healthcare surcharge is at 15% as of April 1st, 2014.
Logically, you'd pay the April obligation by May 15th, 2014—but if they drag their feet with the paperwork again, it might be later...
Either way, the payment in May (covering April) should reflect the 15% rate.

If I have penalty interest hitting my phone bill account from $0.04, where am I supposed to categorize that in the general ledger? Which line item does that actually fall under?

I’m marking this as tax-exempt. There's zero sales tax on this one, so why bother?

Hi everyone!
I’m looking for some guidance... I’m not entirely sure if this is the right place to ask, but please bear with me since I’m still quite new here..
I started working in accounting for small business owners about a year ago, and I just made a bit of a blunder... I didn't submit the required tax forms for the 2013 fiscal year by the end of January like I was supposed to; instead, I filed them later along with the income tax returns.
I’m feeling a bit lost on how to handle this, as I'm worried they might not accept the late filing, so does anyone have any advice??

Maria Miller7 said:Hi everyone!
I’m looking for some guidance... I’m not entirely sure if this is the right place to ask, but please bear with me since I’m still quite new here..
I started working in accounting for small business owners about a year ago, and I just made a bit of a blunder... I didn't submit the required tax forms for the 2013 fiscal year by the end of January like I was supposed to; instead, I filed them later along with the income tax returns.
I’m feeling a bit lost on how to handle this, as I'm worried they might not accept the late filing, so does anyone have any advice??

Generally, employers have to file those W-2s by January 31st, whereas individuals file their own tax returns by April 15th. Are you saying you didn't file the employer side at all yet, or did you just wait until the tax deadline passed to submit everything from the employer's perspective? I understand that you filed your part alongside the tax return, but I'm trying to clarify: was the employer's W-2 package submitted with its own transmittal form?

Kyle Rogers8 said:The healthcare surcharge is at 15% as of April 1st, 2014.
Logically, you'd pay the April obligation by May 15th, 2014—but if they drag their feet with the paperwork again, it might be later...
Either way, the payment in May (covering April) should reflect the 15% rate.

Thanks! Honestly, I think we should probably hear from the software developers themselves—like the folks behind QuickBooks or Xero—since they’re going to have to update the systems to handle these changes anyway.🤷

Brenda Chase3 said:Generally, employers have to file those W-2s by January 31st, whereas individuals file their own tax returns by April 15th. Are you saying you didn't file the employer side at all yet, or did you just wait until the tax deadline passed to submit everything from the employer's perspective? I understand that you filed your part alongside the tax return, but I'm trying to clarify: was the employer's W-2 package submitted with its own transmittal form?

It was submitted by my employer as an attachment to the tax filing, but without a transmittal sheet.🙂

cosmictinker24 said:If I have penalty interest hitting my phone bill account from $0.04, where am I supposed to categorize that in the general ledger? Which line item does that actually fall under?

If you’re asking which account we're talking about—you’ve got four different ones sitting there with those nasty interest rates from the commercial contracts. But if you mean the position in the URI, then forget it; those aren't subject to sales tax. 😉

Maria Miller7 said:It was submitted by my employer as an attachment to the tax filing, but without a transmittal sheet.🙂

The main thing is that you turned it in... don't let this get you down! Next time you'll have the experience under your belt and know exactly how to handle it... just hang in there.😉

David Green642 said:The main thing is that you turned it in... don't let this get you down! Next time you'll have the experience under your belt and know exactly how to handle it... just hang in there.😉

I really appreciate you trying to cheer me up, though I'm honestly not sure if I should try to take action now or if it's better to just let it go.
🤷

can someone tell me if i log things in the inventory ledger using the invoice date when it's issued or the date it actually gets paid?

I record the receipt regardless of whether the invoice is actually paid yet, because at that point, the stuff is physically sitting in the warehouse and ready to be sold. Once I move the product, I clear it out based on the cost price. If I’m actually making something—like putting together flower arrangements—I log the debit and credit using the retail price, otherwise, it’s just the cost. This whole logic applies to retail too...

amberbadger17 said:I record the receipt regardless of whether the invoice is actually paid yet, because at that point, the stuff is physically sitting in the warehouse and ready to be sold. Once I move the product, I clear it out based on the cost price. If I’m actually making something—like putting together flower arrangements—I log the debit and credit using the retail price, otherwise, it’s just the cost. This whole logic applies to retail too...

So, once you get an invoice from a vendor, you do a receipt or a calculation (in my case, the fish market buys stock and resells it), and you put those totals from the receipt or invoice into KP as a debit, then at the end of the day, you put the sales slip totals into the credit?

http://smallbusiness-chicago.gov.lin6.c-a.h...&gid=32&aid=55 Here’s the link that should actually be useful.

amberbadger17 said:http://smallbusiness-chicago.gov.lin6.c-a.h...&gid=32&aid=55 Here’s the link that should actually be useful.

true, but I'm not doing floral work. It's more of a wholesale service business—buying fish and reselling it to customers at the local market. I'm stuck on how to handle the supplier invoices. Do I just dump the total straight into the KP debit, or am I supposed to run a price calculation first? Any advice would be huge.

My bad. I’m just looking at the price you're asking. That’s how I usually handle things, anyway.

amberbadger17 said:My bad. I’m just looking at the price you're asking. That’s how I usually handle things, anyway.

why wouldn't it make sense to book the debit at cost and the credit at retail?

Robin Cook4 said:why wouldn't it make sense to book the debit at cost and the credit at retail?

Actually, it makes perfect sense when you look at how it works. The inventory ledger is maintained based on the retail price. Your entries should reflect the retail value including sales tax from your supplier, rather than the net cost. Think of it like tracking the full value held in stock.

http://www.irs.gov/regulations/inventory_valuation_rules