Accounting for Sole Proprietors: Tax & Bookkeeping Tips

Carol Price4 said:You’ve gotta notify the IRS if you're moving away from handling cash—just like when you first set everything up, you'll need to update your status to closed and send over that XML file.

That way, they’ll officially know you aren't doing business with cash anymore...😉

Look, we're a service-based business and we finally just uninstalled that tax software we had sitting on our office computer. Since those companies are constantly pushing updates—and obviously charging an arm and a leg for them—we decided it’s just not worth the headache. We're strictly doing everything through bank transfers now, so why pay for a subscription for software we haven't even touched in over a year? I was digging through the settings in the fiscalization program and I saw this little checkbox that says "Close Business Location." Is that the magic button right here? I don't want to accidentally wipe out everything since we're still officially registered for reporting, but I need to make sure I don't mess anything up.

Thanks!

Olivia Cruz86 said:Look, we're a service-based business and we finally just uninstalled that tax software we had sitting on our office computer. Since those companies are constantly pushing updates—and obviously charging an arm and a leg for them—we decided it’s just not worth the headache. We're strictly doing everything through bank transfers now, so why pay for a subscription for software we haven't even touched in over a year? I was digging through the settings in the fiscalization program and I saw this little checkbox that says "Close Business Location." Is that the magic button right here? I don't want to accidentally wipe out everything since we're still officially registered for reporting, but I need to make sure I don't mess anything up.

Thanks!

Yep, that’s exactly it.

If you're just doing direct bank transfers, you're still subject to sales tax rules regarding how receipts look and your internal records—but nothing else really applies to you anymore...

I’m looking at a capital expenditure—specifically, purchasing a truck for my small business. How exactly should I be recording this? I mean, it isn't an immediate expense I need to log in the P&L—since the actual cost hits via depreciation—but I still have to account for it on the balance sheet, right? Or am I overthinking this?
Reese, or someone else? Help me out here...

urbangull65 said:I’m looking at a capital expenditure—specifically, purchasing a truck for my small business. How exactly should I be recording this? I mean, it isn't an immediate expense I need to log in the P&L—since the actual cost hits via depreciation—but I still have to account for it on the balance sheet, right? Or am I overthinking this?
Reese, or someone else? Help me out here...

Per Article 22 in the KPI, you can definitely claim the sales tax on trucks if they're being used for business operations.

Just make sure to use the IBM code in your inventory.

Does anyone here know the right way to book an expense when the bank pays a vendor directly using an approved line of credit? I've got a situation where part of the invoice needs to be recorded as an immediate expense, while the rest should be categorized as a fixed asset. Any tips on how to handle that split?

What’s the best way to handle my billing setup in Silicon Valley if I’m planning to split the payment—like, paying some of it in cash and the rest via credit card? Thanks! 🙂

Keith Martinez5 said:What’s the best way to handle my billing setup in Silicon Valley if I’m planning to split the payment—like, paying some of it in cash and the rest via credit card? Thanks! 🙂

Other; 😉

Carol Price4 said:Other; 😉

Thanks 👍

Help! I’m in a bit of a pickle regarding an invoice for vehicle storage fees. The car itself is privately owned, but the towing company I went to pick up—which is actually a branch of a firm based out of Italy—insisted that I issue the invoice under their corporate name. So, I went ahead and entered all their business details and tax ID, but I accidentally used our local US sales tax rate instead. Did I mess this up? Since the car was parked right here in the States, the service was technically performed in the US, so I'm feeling a little lost on the tax implications... If I did indeed make a mistake, what's my best move to fix it now??🤔hvalati everyone for the help

Keith Martinez5 said:Help! I’m in a bit of a pickle regarding an invoice for vehicle storage fees. The car itself is privately owned, but the towing company I went to pick up—which is actually a branch of a firm based out of Italy—insisted that I issue the invoice under their corporate name. So, I went ahead and entered all their business details and tax ID, but I accidentally used our local US sales tax rate instead. Did I mess this up? Since the car was parked right here in the States, the service was technically performed in the US, so I'm feeling a little lost on the tax implications... If I did indeed make a mistake, what's my best move to fix it now??🤔hvalati everyone for the help

Does anyone happen to know the deal with this???

Keith Martinez5 said:Help! I’m in a bit of a pickle regarding an invoice for vehicle storage fees. The car itself is privately owned, but the towing company I went to pick up—which is actually a branch of a firm based out of Italy—insisted that I issue the invoice under their corporate name. So, I went ahead and entered all their business details and tax ID, but I accidentally used our local US sales tax rate instead. Did I mess this up? Since the car was parked right here in the States, the service was technically performed in the US, so I'm feeling a little lost on the tax implications... If I did indeed make a mistake, what's my best move to fix it now??🤔hvalati everyone for the help

Since the service happened here, you use our sales tax—you didn't do anything wrong.👍

Keith Martinez5 said:Help! I’m in a bit of a pickle regarding an invoice for vehicle storage fees. The car itself is privately owned, but the towing company I went to pick up—which is actually a branch of a firm based out of Italy—insisted that I issue the invoice under their corporate name. So, I went ahead and entered all their business details and tax ID, but I accidentally used our local US sales tax rate instead. Did I mess this up? Since the car was parked right here in the States, the service was technically performed in the US, so I'm feeling a little lost on the tax implications... If I did indeed make a mistake, what's my best move to fix it now??🤔hvalati everyone for the help

placidlynx92 said:Since the service happened here, you use our sales tax—you didn't do anything wrong.👍

From what I understand, you don't charge sales tax in this scenario, provided the customer you're billing is registered in the appropriate tax system.
This is treated as a service completed within the European Union.
You just need to add a note to the invoice stating that the tax liability is being transferred via "reverse charge."

It's the same situation as when we buy something from overseas and provide our tax ID, making us responsible for handling the tax on our end.

Zachary Hughes12 said:From what I understand, you don't charge sales tax in this scenario, provided the customer you're billing is registered in the appropriate tax system.
This is treated as a service completed within the European Union.
You just need to add a note to the invoice stating that the tax liability is being transferred via "reverse charge."

It's the same situation as when we buy something from overseas and provide our tax ID, making us responsible for handling the tax on our end.

Look, whenever I'm dealing with impound fees and they hand me a VAT ID that's verified in the VIES system, I just cite Section 17 and apply the reverse charge. Some consultants tried to tell me it should be tied to Section 19 regarding real estate—claiming VAT should be applied—but honestly, that makes zero sense to me. That would only apply if I were charging them for parking or renting out a specific plot of land, which isn't what an impound fee is. An impound fee is its own thing, so I stick to Section 17. I remember one time I had a company from Germany; a tow truck picked up a car, and all they gave me was their name and address. They didn't give me a VAT ID, and I couldn't find one anywhere on their website, so I just charged them VAT.

Nicole Lee6 said:Look, whenever I'm dealing with impound fees and they hand me a VAT ID that's verified in the VIES system, I just cite Section 17 and apply the reverse charge. Some consultants tried to tell me it should be tied to Section 19 regarding real estate—claiming VAT should be applied—but honestly, that makes zero sense to me. That would only apply if I were charging them for parking or renting out a specific plot of land, which isn't what an impound fee is. An impound fee is its own thing, so I stick to Section 17. I remember one time I had a company from Germany; a tow truck picked up a car, and all they gave me was their name and address. They didn't give me a VAT ID, and I couldn't find one anywhere on their website, so I just charged them VAT.

Well, this person actually gave me their VAT ID... I even made sure to include everything on the invoice, but I ended up calculating and charging them VAT anyway. Now I'm wondering, if I messed that up, what's the best way to go about fixing it?

Hey everyone... quick question for the group. I've got a crew in construction, and normally they're on an 8-hour schedule during the week. But since we're pushing to wrap up a project, they had to pull an extra hour two days this week, making it 9-hour shifts. Should I just log that extra hour as redistributed working hours, or is it better to just report it as if they worked on Saturday?

Keith Martinez5 said:Well, this person actually gave me their VAT ID... I even made sure to include everything on the invoice, but I ended up calculating and charging them VAT anyway. Now I'm wondering, if I messed that up, what's the best way to go about fixing it?

Honestly, I wouldn't lose too much sleep over it...

Either you cite Section 19 of the Value Added Tax Act on the invoice—which basically implies you've tied the service to a rental property, which is taxable here in the States—or you just strike the VAT ID from the invoice entirely and put a zero in its place. That’s what I personally do when someone just gives me a business name 😬 without any credentials; it makes it look like you didn't have a valid ID to verify through the European Union system, so you had no choice but to charge the tax.

So, I’ve got this scholarship agreement set up at $533 per month, signed back on September 1st, 2016.
When it comes to the purpose of payment, do I just write "scholarship" and leave it at that? And about those monthly payroll tax filings—I'm starting the actual payments on September 15th, so does my first filing go through until October 15th, 2016? Is there anything else I need to watch out for regarding scholarship stuff?

thanks!

Nicole Lee6 said:Honestly, I wouldn't lose too much sleep over it...

Either you cite Section 19 of the Value Added Tax Act on the invoice—which basically implies you've tied the service to a rental property, which is taxable here in the States—or you just strike the VAT ID from the invoice entirely and put a zero in its place. That’s what I personally do when someone just gives me a business name 😬 without any credentials; it makes it look like you didn't have a valid ID to verify through the European Union system, so you had no choice but to charge the tax.

Thanks for the tip! I'll definitely try one of those routes... I did attempt to call them to explain that I'd be sending over a corrected invoice, but my Italian isn't quite fluent enough to navigate that conversation successfully, so I think that option is pretty much off the table.

What exactly should I enter under the Purpose Code when paying my contributions? I was looking through the IRS guidelines and saw that for salary, I should use SALA—so I used SALA for my commuting allowance too—but I left the field blank for the actual contributions themselves... Do you think that’ll fly?

It really should be. You don't actually need a code for taxes or payroll contributions anyway.