Accounting for Sole Proprietors: Tax & Bookkeeping Tips

Olivia Cruz86 said:Hey there!

So, I’ve got this situation—we bought some supplies using an account under a sole proprietorship's name, but the actual payment went through my wife's personal debit card. Now, here's the kicker: can we actually record that expense in our petty cash fund and then just pull out cash from it to square things up? We don't even carry business cards at our office... thanks!

Sure you can.🙂

I still get the chills whenever I have to deal with the cash drawer at the Department of Health and Human Services. Gross.

In my opinion, the most important thing is getting the bookkeeping right—since this wasn't paid via wire transfer, we’ve gotta record it as a cash expense.

Has there been any news regarding the rules for the HHS cash drawer? They aren't actually required to maintain one, right? Sure, fiscalization always pops up, but if you just look at the KPI recap, it should be pretty easy to figure out exactly how much needs to be deposited as revenue so you don't end up sitting on way too much extra cash...

I don't see any reason to have a separate tax account for people earning an income. Our paperwork is already such a bureaucratic nightmare as it is; there's really no need to make our lives even more miserable.
But hey, if someone actually enjoys that kind of headache, be my guest. 😁

Henry Edwards33 said:I don't see any reason to have a separate tax account for people earning an income. Our paperwork is already such a bureaucratic nightmare as it is; there's really no need to make our lives even more miserable.
But hey, if someone actually enjoys that kind of headache, be my guest. 😁

I couldn't agree more. I've never managed a cash drawer in my life, and I certainly don't plan on starting now for any small business owner... ☕
When I was answering that question, I just meant that you can still record it as a cash expense if, say, a spouse pays via credit card and it's properly documented with a receipt.

Alright, thanks. I love getting that validation. Honestly, dealing with tax forms is just pure misery.

Anyway, let’s talk prepayments for a second... are we taxpayers going to be paying our prepayments based on what we filed for 2016 next year?

Maybe this sounds like a dumb question, but since the standard deduction is jumping up, maybe it isn't actually that stupid...?

Is there anything new on that front? Thanks.

Hey everyone,

My small business pays a subscription fee for a radio receiver in the company car. The vehicle is registered to the business, but I mostly use it for personal stuff, so I split the expenses 70/30. I guess should I be treating this bill the same way, or can I just write off the whole thing?

What exactly needs to be on a business stamp?
If the full legal name on my sole proprietorship paperwork is listed as, say: ARCADE, service and retail business, owner XY, Seattle, Seattleite10
but under the short name it’s just ARCADE, owner XY
does that part "service and retail business" actually have to be on the stamp, or can I leave it off?

Also, when it comes to incoming invoices sent to the business, does it need to show the whole thing—ARCADE, service and retail business, owner XY—or is just ARCADE, owner XY enough?

Are there any updates regarding how we should be booking those hiring incentives? I mean, am I still supposed to record them as receipts for the full amount exactly as they were paid out? For example, if the money hit my bank account on November 15th, I’d just go ahead and book the receipt in the KPI on that same date.

graniterider10 said:Are there any updates regarding how we should be booking those hiring incentives? I mean, am I still supposed to record them as receipts for the full amount exactly as they were paid out? For example, if the money hit my bank account on November 15th, I’d just go ahead and book the receipt in the KPI on that same date.

Just book them as receipts; nothing has changed on that front.

So, are we looking at the new payroll calculations kicking in starting January 1st, 2017—meaning they’ll actually hit the December 2016 checks? Or what's the deal?

Olivia Cruz86 said:So, are we looking at the new payroll calculations kicking in starting January 1st, 2017—meaning they’ll actually hit the December 2016 checks? Or what's the deal?

The updated rules regarding tax-free thresholds and the new tax rates are going into effect this coming January when they cut the checks for December 2016.

As for the new minimum base rate $1.00, that won't kick in until February when they process the January 2017 payroll...

Hey everyone,

My small business pays a subscription fee for the radio in our company car. We bought the vehicle through the business, but I use it for personal stuff too, so I usually split the expenses 70/30. Should I handle this specific bill the same way, or can I just write off the whole thing?
Also, I was wondering about this:
The owner makes monthly income tax prepayments. Since those prepayments aren't listed as business expenses, if there ends up being a remaining tax bill after the final calculation, will that count as a deductible expense?

rowdybison3 said:Hey everyone,

My small business pays a subscription fee for the radio in our company car. We bought the vehicle through the business, but I use it for personal stuff too, so I usually split the expenses 70/30. Should I handle this specific bill the same way, or can I just write off the whole thing?
Also, I was wondering about this:
The owner makes monthly income tax prepayments. Since those prepayments aren't listed as business expenses, if there ends up being a remaining tax bill after the final calculation, will that count as a deductible expense?

No, it won't, because income tax isn't a tax-deductible expense.

Nicole Lee6 said:No, it won't, because income tax isn't a tax-deductible expense.

Thanks

I could really use some help here!

How should I handle recording depreciation when transitioning from a standard corporate tax structure to a simplified cash-basis system?

As of January 1st, 2016, I have roughly $5667 in unamortized fixed assets (DI), and then on January 1st, 2017, I’m making the switch to the simplified method.

For my business receipts, I'm looking at:
- the fair market value of the long-term assets,
And for my business expenses:
- the book value of those long-term assets based on the inventory at the moment of liquidation,

My question is: does that "fair market value" refer to what it was worth back on January 1st, 2016, or something else?

Thanks so much in advance!

Justin Myers7 said:I could really use some help here!

How should I handle recording depreciation when transitioning from a standard corporate tax structure to a simplified cash-basis system?

As of January 1st, 2016, I have roughly $5667 in unamortized fixed assets (DI), and then on January 1st, 2017, I’m making the switch to the simplified method.

For my business receipts, I'm looking at:
- the fair market value of the long-term assets,
And for my business expenses:
- the book value of those long-term assets based on the inventory at the moment of liquidation,

My question is: does that "fair market value" refer to what it was worth back on January 1st, 2016, or something else?

Thanks so much in advance!

Personally, I’d record it as of December 31st, 2016.

Thanks!
To me, it’s the only thing that makes sense, though it's always a bit tricky when you're getting unsolicited advice from some "old school" accountant...

Calling all small business owners working in Silicon Valley...

DI procurement - $13, Section 22, it was depreciated $1047 and then we moved to Sales...

I've generated an invoice in the Sales module, but since the non-depreciated value didn't hit expenses, how do I handle the payment? If I try to enter the receipt via the payment table, everything just gets lumped into receipts...

Honestly, I think sales tax is driving me crazy this month—I must be missing something totally obvious. Please help! 🙂

Carol Price4 said:Calling all small business owners working in Silicon Valley...

DI procurement - $13, Section 22, it was depreciated $1047 and then we moved to Sales...

I've generated an invoice in the Sales module, but since the non-depreciated value didn't hit expenses, how do I handle the payment? If I try to enter the receipt via the payment table, everything just gets lumped into receipts...

Honestly, I think sales tax is driving me crazy this month—I must be missing something totally obvious. Please help! 🙂

I'm not 100% sure I follow what you're asking, 🙂
I'm guessing you don't want that non-depreciated portion showing up in your KPI bank receipts?
Try checking the "outside KPI" box in the payments table—either for the whole thing or just that specific part of the invoice you want to keep separate from the bank deposits. That should mark the IRA as paid without dumping it into your KPI.
If things still look wonky, you might need to tweak it manually in the Receipts document.

I’m not booking this through the IRA module—instead, I'm running it through the Sales module, which is why I hit a bit of a snag since there aren't any toggle switches available... but honestly, I think if I just categorize the non-depreciable portion of the DI under expenses, I’ll land on the same number anyway.

The DI purchase was handled under Section 22, so it didn't hit the expense line initially; depreciation will go into expenses later, and since the full invoice was logged under receipts, the non-depreciable part should also head straight to expenses.

Does that sound right to you guys? Come on, Brenda Chase3, Henry Edwards33, Carol Price4, Henry Edwards33—where are you hiding??