Accounting for Sole Proprietors: Tax & Bookkeeping Tips

Look, at its core, it’s basically a receipt since the approval went through. Honestly, who cares why they approved it? But if it wasn't settled via a standard bank transfer—and if my amateur brain isn't totally failing me here—it should be recorded as an in-kind transaction. (Of course, please feel free to correct me, I'm definitely not a CPA.)

Maybe try logging it as an in-kind payment? Just do it manually if the software is being a pain and won't let you?

Yeah, just like compensation—in kind.

Can an individual operating as a sole proprietorship actually sign a lease agreement, or is there a more effective way to structure that kind of deal? Also, if they decide to pour capital directly into that same property, would those investments be classified as long-term intangible assets or tangible ones—especially since they’re essentially investing in their own holdings?

Christian Cruz41 said:A small business owner ends up paying higher payroll taxes than what’s actually required while still reporting a standard salary ....
Is that even legally possible? And if they're doing that, how does it mess with the tax codes on the quarterly filings?
thanks

There’s a section on this in the updated IRS guidelines.

Basically, you can choose to pay payroll taxes based on a base amount multiplied by a coefficient—like 2, 3, or even higher...
The official way to handle it is to file a request with the IRS, they issue a formal determination, and then you wouldn't even need to submit the standard JPMorgan Chase filing in those specific cases...
Though, just to be honest, last summer I was paying an independent contractor using an inflated base, but I simply used a different code on the JPMorgan Chase form and didn't bother submitting any special paperwork to the IRS...

Hey there!
I’m looking for some advice from veteran bookkeepers who have been using Synesis for a while now. I’ve got a client running a small hospitality business—basically a local cafe owner—who is registered for sales tax. How are you guys handling credit card sales? Up until now, my process has been a total headache: I’ve been recording every single individual credit card transaction one by one. Then, once the funds actually hit the bank account from the processor, I record the payment in the sales tax module using the gross amount and log the processing fees as miscellaneous expenses. Honestly, with the sheer volume of transactions we're seeing lately, I just can't keep up with this manual grind. Is there any way to make life easier? I want to be able to record everything in one lump sum based on the monthly merchant statement, while still making sure the bank deposit matches perfectly and the sales tax stays accurate regarding those processed fees.

amberbadger17 said:Look, at its core, it’s basically a receipt since the approval went through. Honestly, who cares why they approved it? But if it wasn't settled via a standard bank transfer—and if my amateur brain isn't totally failing me here—it should be recorded as an in-kind transaction. (Of course, please feel free to correct me, I'm definitely not a CPA.)

Maybe try logging it as an in-kind payment? Just do it manually if the software is being a pain and won't let you?

Anthony Jackson81 said:How the hell am I supposed to handle customer approvals when the money hasn't actually hit the bank yet? It’s not even income if it hasn't been paid! I don't know if it's just my software acting up, but whenever I log it through the general ledger, the VAT form pulls it in like I've already collected the cash, but then it doesn't show up in my KPI because I haven't entered it there either. 🤦 So what's the move here?

Here is my workaround for the credit: record it as in-kind revenue with a negative sign (-), then close out the original invoice it's tied to by entering a corresponding in-kind receipt with a positive sign (+). At least, that's how I handle it....

Nicole Lee6 said:Here is my workaround for the credit: record it as in-kind revenue with a negative sign (-), then close out the original invoice it's tied to by entering a corresponding in-kind receipt with a positive sign (+). At least, that's how I handle it....

Exactly—that's my move too! 🙂

Can someone please give me an answer regarding how to book credit card payments?

Peter Young5 said:Can an individual operating as a sole proprietorship actually sign a lease agreement, or is there a more effective way to structure that kind of deal? Also, if they decide to pour capital directly into that same property, would those investments be classified as long-term intangible assets or tangible ones—especially since they’re essentially investing in their own holdings?

Well, at the end of the day, an individual is still just an individual, regardless of whether they have a small business or a sole proprietorship. A sole proprietorship isn't its own separate legal entity—it's just you—and obviously, you can't really sign a contract with yourself. As for the assets, you’d typically record those via a formal entry into your business holdings, but the distinction between tangible and intangible assets doesn't actually change just because the owner is the one providing the capital. That classification depends entirely on the nature of the asset itself, not who's paying for it.

Carol Price4 said:Yeah, just like compensation—in kind.

And you could even do it through a bank transfer.
For example, if I have an invoice from $333 that a client needs to pay, but they also have an approved credit from, say, $33.
When the payment comes in from $300, I’d record it as a $1,000 deposit minus a $100 adjustment. So, effectively, there's $900 hitting the books, which matches the actual cash flow moving through the bank account.

Jessica Gonzalez30 said:And you could even do it through a bank transfer.
For example, if I have an invoice from $333 that a client needs to pay, but they also have an approved credit from, say, $33.
When the payment comes in from $300, I’d record it as a $1,000 deposit minus a $100 adjustment. So, effectively, there's $900 hitting the books, which matches the actual cash flow moving through the bank account.

That works too! Honestly, I find it way easier to track everything when I list out actual cash inflows and outflows—that's just how my brain works—but what you're saying definitely makes sense.

Jessica Gonzalez30 said:Well, at the end of the day, an individual is still just an individual, regardless of whether they have a small business or a sole proprietorship. A sole proprietorship isn't its own separate legal entity—it's just you—and obviously, you can't really sign a contract with yourself. As for the assets, you’d typically record those via a formal entry into your business holdings, but the distinction between tangible and intangible assets doesn't actually change just because the owner is the one providing the capital. That classification depends entirely on the nature of the asset itself, not who's paying for it.

So, let me get this straight: if someone builds a manufacturing facility on land they already own, what’s the protocol? Do they record the land in the fixed assets, and then once the facility is actually up and running, add the building itself as a tangible asset?
And when exactly does something officially enter "service"? Is it just a matter of finishing the construction, or do you need something like a Certificate of Occupancy to serve as proof?
Thanks

Mark Torres45 said:Hey there!
I’m looking for some advice from veteran bookkeepers who have been using Synesis for a while now. I’ve got a client running a small hospitality business—basically a local cafe owner—who is registered for sales tax. How are you guys handling credit card sales? Up until now, my process has been a total headache: I’ve been recording every single individual credit card transaction one by one. Then, once the funds actually hit the bank account from the processor, I record the payment in the sales tax module using the gross amount and log the processing fees as miscellaneous expenses. Honestly, with the sheer volume of transactions we're seeing lately, I just can't keep up with this manual grind. Is there any way to make life easier? I want to be able to record everything in one lump sum based on the monthly merchant statement, while still making sure the bank deposit matches perfectly and the sales tax stays accurate regarding those processed fees.

Look, during the reporting period, you just have the restaurateur provide a summary of sales broken down by the applicable tax rates—say, 6% and 8%—plus those merchant fees. It’s pretty straightforward: you just book the total turnover into a single Sales Tax Unit entry. You mark the merchant fee portion as non-taxable, and then distribute the rest into the appropriate tax columns based on how much sales tax applies to each category... just spread it out as if it were cash payments.
As for those merchant fees, you can just bundle them all together at the end of the year since they aren't subject to sales tax...
I think that works fine—feel free to correct me if I've missed something, as I'm still relatively new to this myself...

Nicole Lee6 said:Here is my workaround for the credit: record it as in-kind revenue with a negative sign (-), then close out the original invoice it's tied to by entering a corresponding in-kind receipt with a positive sign (+). At least, that's how I handle it....

Yeah, my bad. I totally butchered my explanation. It has to be the minus (for the approval) and the plus (for the invoice); both recorded as in-kind. 🤦

Mark Torres45 said:Hey there!
I’m looking for some advice from veteran bookkeepers who have been using Synesis for a while now. I’ve got a client running a small hospitality business—basically a local cafe owner—who is registered for sales tax. How are you guys handling credit card sales? Up until now, my process has been a total headache: I’ve been recording every single individual credit card transaction one by one. Then, once the funds actually hit the bank account from the processor, I record the payment in the sales tax module using the gross amount and log the processing fees as miscellaneous expenses. Honestly, with the sheer volume of transactions we're seeing lately, I just can't keep up with this manual grind. Is there any way to make life easier? I want to be able to record everything in one lump sum based on the monthly merchant statement, while still making sure the bank deposit matches perfectly and the sales tax stays accurate regarding those processed fees.

Sadly, I’ve never figured out a better way myself. For five years now, I've been stuck grinding through it day by day, card by card.

But hey, if it helps me stay sane during year-end reconciliations, I guess I'll keep suffering.

Keith Martinez5 said:I just received a notice from HOK stating that the deduction amount has been updated as of January 1st, 2017 $25. Up until this point, I’ve been paying my deduction as a flat quarterly fee of $52—is that correct?

I'm completely lost here, especially since I received a notice yesterday for an amount of $76?
Does anyone actually know what’s going on with these Chamber of Commerce contribution changes?

William Miller16 said:I'm completely lost here, especially since I received a notice yesterday for an amount of $76?
Does anyone actually know what’s going on with these Chamber of Commerce contribution changes?

Look, the Chamber fee is set at 2% of the basic standard deduction as laid out in the Income Tax Act. Once they rolled out the new Income Tax Act back on January 1st, 2017, that basic standard deduction was bumped up to $1267. Because of that shift, the monthly Chamber contribution lands at $25 starting from the beginning of 2017...
Since this fee is handled on a quarterly basis, you ended up getting a notice for $76 to cover the whole quarter (which is just $25 x 3).

I’ve honestly never run into a situation where a small business owner closes one LLC just to immediately open another one right away.
Without getting into the "why" behind their decision, I’m mostly curious about the logistics. Is the paperwork process identical to just shutting down a business normally?
What should I be looking out for here? Specifically, what happens to any prepaid income tax installments that have already been settled?

Any advice would be appreciated. 😁

Henry Edwards33 said:I’ve honestly never run into a situation where a small business owner closes one LLC just to immediately open another one right away.
Without getting into the "why" behind their decision, I’m mostly curious about the logistics. Is the paperwork process identical to just shutting down a business normally?
What should I be looking out for here? Specifically, what happens to any prepaid income tax installments that have already been settled?

Any advice would be appreciated. 😁

For the one being closed—just list any unpaid rent as income and any unpaid utility bills as expenses—and if there's depreciation involved, tack that unamortized value into the income side.

What date are they using for the closure?

I can't say for sure, but my gut tells me we won't see anything until mid-March. Why?

Look, this is just standard end-of-quarter closing stuff. I’ve also got some outstanding issues with the IRS that I need to sort out first.
.