Accounting for Sole Proprietors: Tax & Bookkeeping Tips

Carol Price4 said:You just book the total bill amount $472, claim the input sales tax of $92, and exclude the part that isn't taxable ($11)—plus the subtotal as usual—(I'm assuming some is for the phone itself and some is service fees).

That "amount due" bit is really just a note for the customer showing what they need to pay upfront before the rest goes onto installments.

Fine. That’s how I used to book things at an architectural firm.

But now I'm wondering, can I—or should I—record the actual cash outflow of 256.16 through the petty cash account in Synesis, while reporting the sales tax exactly as it appears on the receipt?
Is that actually allowed? Because if I do it that way, my expenses will perfectly match what I actually paid out.
Ugh... sorry... whenever something falls outside my usual bookkeeping routine, I totally freeze up. I rarely run into weird scenarios like this, but here we are... I'm stuck.😢

graniterider10 said:Fine. That’s how I used to book things at an architectural firm.

But now I'm wondering, can I—or should I—record the actual cash outflow of 256.16 through the petty cash account in Synesis, while reporting the sales tax exactly as it appears on the receipt?
Is that actually allowed? Because if I do it that way, my expenses will perfectly match what I actually paid out.
Ugh... sorry... whenever something falls outside my usual bookkeeping routine, I totally freeze up. I rarely run into weird scenarios like this, but here we are... I'm stuck.😢

Just record exactly what was paid... and that goes straight to expenses.

It's just like any other partial payment—you just book the portion you actually paid and calculate the sales tax proportionally.

Lisa Nelson4 said:I've been digging around trying to find where that’s actually stated officially, but honestly, I haven't found anything yet. Plus, from what I can tell, Synesis pulls everything into the accounts payable and receivable records as long as it's been posted through the accounting system—regardless of how the money actually changed hands.

Check out Article 37 of the Federal Income Tax Code.

Carol Price4 said:Just record exactly what was paid... and that goes straight to expenses.

It's just like any other partial payment—you just book the portion you actually paid and calculate the sales tax proportionally.

Thanks.🙂

mellowangler7 said:Check out Article 37 of the Federal Income Tax Code.

Thanks, Internal Revenue Code Section 37.

So, since I'm finally exiting the sales tax system, I included the input tax correction in my very last filing. This covers the sales tax on our inventory value as of December 31st—plus there's that long-term asset situation from earlier this year when we were still in the system. We just bought a laptop and paid it off in three installments, where the total sales tax ended up being $113... I guess I don't need to do a formal correction for that, right? Oh, and I also factored in unpaid incoming and outgoing invoices as if they had already been settled in the sales tax calculation. Am I missing anything else? I mean, I really think I've covered everything, but I could be wrong!

Can someone explain why exchange rate differences aren't a thing for sole proprietors anymore?
A colleague just told me her advisor said she can't record exchange rate gains or losses during the acquisition phase because there’s always going to be some positive or negative fluctuation by the time the actual payment happens. Now she's saying the whole accounting setup needs to be overhauled.

Why did this change, and what’s the new way we’re supposed to handle this?

Henry Edwards33 said:Can someone explain why exchange rate differences aren't a thing for sole proprietors anymore?
A colleague just told me her advisor said she can't record exchange rate gains or losses during the acquisition phase because there’s always going to be some positive or negative fluctuation by the time the actual payment happens. Now she's saying the whole accounting setup needs to be overhauled.

Why did this change, and what’s the new way we’re supposed to handle this?

The internal audit report? So does that mean we have to redo the sales tax filings and the quarterly reports too?

I’ve got a bit of a bookkeeping puzzle on my hands—I just picked up some toner for the office printer, but the vendor is actually registered over in Austria. The invoice itself is listed in US dollars and shows no sales tax (it includes a specific clause stating the tax exemption applies). Now, here’s where I’m getting stuck: how on earth do I record this in Silicon Valley? The total came out to $404.76, and the payment was sent directly to our Chase Bank account. When I tried to log the acquisition of goods within the European Union through the IRS system, it started asking me for a foreign currency amount, the exchange rate date, and the specific rate used... but since the transaction was handled in US dollars, I’m completely lost on what to enter in those fields....
Thanks so much for the help!!!

I've got a quick question regarding tax prepayments and income tax withholdings
since we ended up overpaying a massive chunk of income tax and withholdings last year—which basically means we're sitting on a huge refund right now. I was thinking, instead of just waiting for the check, can we just apply that overpayment toward our future tax prepayments? Like, can you actually sit down and hammer out an agreement with the IRS to make that happen, and if so, what’s the play here?

Keith Martinez5 said:I’ve got a bit of a bookkeeping puzzle on my hands—I just picked up some toner for the office printer, but the vendor is actually registered over in Austria. The invoice itself is listed in US dollars and shows no sales tax (it includes a specific clause stating the tax exemption applies). Now, here’s where I’m getting stuck: how on earth do I record this in Silicon Valley? The total came out to $404.76, and the payment was sent directly to our Chase Bank account. When I tried to log the acquisition of goods within the European Union through the IRS system, it started asking me for a foreign currency amount, the exchange rate date, and the specific rate used... but since the transaction was handled in US dollars, I’m completely lost on what to enter in those fields....
Thanks so much for the help!!!

If they have an Austrian VAT number, then it counts as an acquisition... just set the currency to USD (840) and use an exchange rate of 1.😉

Henry Edwards33 said:Can someone explain why exchange rate differences aren't a thing for sole proprietors anymore?
A colleague just told me her advisor said she can't record exchange rate gains or losses during the acquisition phase because there’s always going to be some positive or negative fluctuation by the time the actual payment happens. Now she's saying the whole accounting setup needs to be overhauled.

Why did this change, and what’s the new way we’re supposed to handle this?

Advisors are becoming a completely useless breed, honestly. They're getting so inflexible. This is definitely about a small business owner. 🙂
It feels like they can't see the forest for the trees. They cling blindly to their "manuals" instead of actually using common sense.
An invoice arrives—first exchange rate; the bill gets paid—second exchange rate (I won't go into further detail). If you process the payment at the initial rate and then book the exchange difference up to the second rate, both end up in the same KPI column (writing this from an income perspective). Cash flow remains fine. I guess > doesn't care if it's split into two entries or one. Just report the acquisition at the first rate.
And imagine if the taxpayer is also dealing with intra-community transactions, where everything is calculated based on the initial monthly rate, only for the IRS to compare it all against the sales tax filings. It makes me wonder who's actually sane here.

Richard Howard55 😘

I've decided I’m sticking with fighting those exchange rate discrepancies because, honestly, anything else feels wrong. It’s just bad practice.
Your confirmation basically tells me I’m doing exactly what I should be doing—and if I don't get some clarity soon, I might actually lose my cool. 😬

Carol Price4 said:If they have an Austrian VAT number, then it counts as an acquisition... just set the currency to USD (840) and use an exchange rate of 1.😉

Thanks 👍

I’m dealing with exchange rate differences just like the rest of you.

Here’s the deal: I have a joint filing, but one partner pulled out on June 30th. So, I closed out our joint filing through June 30th, calculated all the depreciation up to that date, and called it a day. The other partner kept the business running solo starting July 1st, taking over everything—including the fixed asset list with the book value exactly as it stood on June 30th.

The problem is, I have to submit the DI form via the e-filing system. I used the dual rates, but the damn thing keeps flagging errors that aren't even there! How am I supposed to actually submit this? This form is driving me absolutely insane. It did the exact same thing last year, and I just forced it through anyway.

When I look at the DI form itself, everything looks perfect. Everything is calculated up to June 30th using the dual rates, yet the system is screaming at me that my rates are wrong!!! Are any of you dealing with this garbage too?

Arthur Bishop6 said:I’m dealing with exchange rate differences just like the rest of you.

Here’s the deal: I have a joint filing, but one partner pulled out on June 30th. So, I closed out our joint filing through June 30th, calculated all the depreciation up to that date, and called it a day. The other partner kept the business running solo starting July 1st, taking over everything—including the fixed asset list with the book value exactly as it stood on June 30th.

The problem is, I have to submit the DI form via the e-filing system. I used the dual rates, but the damn thing keeps flagging errors that aren't even there! How am I supposed to actually submit this? This form is driving me absolutely insane. It did the exact same thing last year, and I just forced it through anyway.

When I look at the DI form itself, everything looks perfect. Everything is calculated up to June 30th using the dual rates, yet the system is screaming at me that my rates are wrong!!! Are any of you dealing with this garbage too?

I think the issue lies elsewhere... maybe the FBI hasn't set up the e-filing intake yet.
Basically, for the 2015 tax year, Column 11—which shows the DI write-off date—couldn't appear because you can't enter a write-off date until January 1, 2016.
The version I'm looking at on the FBI site doesn't even have Column 11 yet.

When's the deadline for filing that e-filing form?
Is it February 28th? 🤔

stormybadger8 said:When's the deadline for filing that e-filing form?
Is it February 28th? 🤔

I'll probably file it before HHS, and just attach the confirmation from the e-filing system as an exhibit.👍

I could really use some advice here... I’ve been working within the inventory module in Sinesys, and back in 2016, I ran the depreciation calculations and the fixed asset inventory for December 31, 2016. Since I had already closed out the books, the correct accounting values didn't carry over properly into 2017—it was a bit of a mess! My contact over at Pupilla suggested that I just re-run the depreciation for 2017 using a retroactive date from 2016. That actually worked out fine, and now my fixed asset inventory as of January 1, 2017, shows the right values. However, I’m stuck on the individual inventory cards. Should I be manually adjusting those values to fix the discrepancy, or is this something that's supposed to happen automatically if I haven't missed a step somewhere? Does anyone have any insight on how this usually flows? Thanks in advance! 🙂

Keith Martinez5 said:I could really use some advice here... I’ve been working within the inventory module in Sinesys, and back in 2016, I ran the depreciation calculations and the fixed asset inventory for December 31, 2016. Since I had already closed out the books, the correct accounting values didn't carry over properly into 2017—it was a bit of a mess! My contact over at Pupilla suggested that I just re-run the depreciation for 2017 using a retroactive date from 2016. That actually worked out fine, and now my fixed asset inventory as of January 1, 2017, shows the right values. However, I’m stuck on the individual inventory cards. Should I be manually adjusting those values to fix the discrepancy, or is this something that's supposed to happen automatically if I haven't missed a step somewhere? Does anyone have any insight on how this usually flows? Thanks in advance! 🙂

You’re going to have to manually adjust the inventory values and then rerun the 2016 depreciation (within the 2017 books).

wiredmarlin41 said:You’re going to have to manually adjust the inventory values and then rerun the 2016 depreciation (within the 2017 books).

Thanks! I went ahead and reran the depreciation, but those inventory cards were a bit of a puzzle for me—the documentation doesn't really specify if these adjustments trigger automatically or if you have to go in and do them by hand. Since I just started using this module recently, this is my first real year wrestling with it.
So, just to be absolutely sure I've got this right—I should be performing the inventory value adjustments directly on the cards within the 2016 books?