Accounting for Sole Proprietors: Tax & Bookkeeping Tips

David Mitchell4 said:I hear you, but I think you’re off base here. You might want to double-check which sequence number is actually being offered next. If you’ve been messing around with manual overrides... well, look, the invoice number should always be the very next one in line, regardless of whether the previous entry was a finalized sale or just a transaction.

Look, we're clearly talking past each other here. 🙂
The situation hasn't even happened yet, but I want to iron this out now so I know what my options are. This isn't about me "messing" with the software.

Let me try explaining it differently using a real-world example.
I have one web shop where everything goes through a direct bank transfer. When someone pays, I mark it as paid, and the site automatically generates an invoice—let's say 1-1-1.

Then I have a second, totally separate business with its own web shop—a different app entirely. Here, customers can pay via bank transfer or credit card.
Now, if someone pays via bank transfer on this second shop, the system also issues an invoice labeled 1-1-1 because it has no idea that the first shop already used that number, you know?
But fine, I can go into the admin panel and tweak how those invoices look if I have to.

Here’s where the third scenario hits the fan: someone pays by credit card on that second shop, and now that invoice needs to be officially reported for tax purposes. For the reporting part, let's say we use a service like Square. That's where the headache starts. From what I understand, I can't adjust the numbering or start skipping numbers within the service. I can only set the very first starting number.
So, I set the first invoice to 2-1-1... but then the next invoice on my FIRST web shop also turns out to be 2-1-1 (unless I manually change it there to 3-1-1). Then, a taxed invoice comes along that *should* be 4-1-1, but the Square service won't let me jump to 4-1-1 because the last number it recorded was 2-1-1.

Hopefully, that makes sense now.
How do I fix this mess?

Can I just register each web shop as a separate business location or assign them to different registers or payment terminals so the numbering stays separate?

The answer is yes—each shop maintains its own numbering sequence. However, you could potentially link the second one to Elvis Presley via an API so that all your invoices, whether cash or transaction-based, flow through a single point. You'll just need to hire a developer to handle that integration for you.

David Mitchell4 said:The answer is yes—each shop maintains its own numbering sequence. However, you could potentially link the second one to Elvis Presley via an API so that all your invoices, whether cash or transaction-based, flow through a single point. You'll just need to hire a developer to handle that integration for you.

Look, that’s exactly what I’m asking 🙂 how do I actually separate those sequences?

Could I maybe set it up like this?:

WEB SHOP 1 INVOICE
accountnumber-storelocation1-register1

WEB SHOP 2 INVOICE
DIGITAL TRANSACTION:
accountnumber-storelocation2-register1-operator1

REGISTERED SALE:
accountnumber-storelocation2-register2-operator1

neonsurfer13 said:Look, that’s exactly what I’m asking 🙂 how do I actually separate those sequences?

Could I maybe set it up like this?:

WEB SHOP 1 INVOICE
accountnumber-storelocation1-register1

WEB SHOP 2 INVOICE
DIGITAL TRANSACTION:
accountnumber-storelocation2-register1-operator1

REGISTERED SALE:
accountnumber-storelocation2-register2-operator1

That could work... it’d look pretty much like this:

1) 1/1/1, 2/1/1, 3/1/1 ...

2) 1/2/1, 2/2/1, 3/2/1...
and
1/2/2, 2/2/2, 3/2/2...

So basically—Location 1, Register 1
Location 2—Register 1 and Register 2

Carol Price4 said:That could work... it’d look pretty much like this:

1) 1/1/1, 2/1/1, 3/1/1 ...

2) 1/2/1, 2/2/1, 3/2/1...
and
1/2/2, 2/2/2, 3/2/2...

So basically—Location 1, Register 1
Location 2—Register 1 and Register 2

Thanks!

Well, Satan made a pretty solid point there... 🙂

Just one more thing... I’ve set up my web shops so they look like two completely separate business locations. But honestly, they’re both just virtual storefronts, not two actual brick-and-mortar shops at different addresses. How do I handle this?
I haven't actually registered a business location through the IRS portal for tax purposes yet, so I'm not sure what my options are here. Since the first web shop is still running through my main transactional account, I don't need to register it separately. For the second shop, how am I supposed to report the business location?

neonsurfer13 said:Just one more thing... I’ve set up my web shops so they look like two completely separate business locations. But honestly, they’re both just virtual storefronts, not two actual brick-and-mortar shops at different addresses. How do I handle this?
I haven't actually registered a business location through the IRS portal for tax purposes yet, so I'm not sure what my options are here. Since the first web shop is still running through my main transactional account, I don't need to register it separately. For the second shop, how am I supposed to report the business location?

You shouldn't run into any issues. You only need to register the shop that actually processes cash or credit cards. When you're setting it up, just select "online store" as the type of business location.
Got some brand new instructions from yesterday

Hey there!

Quick question regarding asset write-offs—I’ve got this old printer that's already fully depreciated, but the damn thing finally kicked the bucket. We’re planning to draft a formal decision to write it off the books. The plan is to drop it off at an e-waste recycling center and grab a disposal receipt to prove it's gone... So, how the hell am I supposed to book that in the accounting system?

So, they finally added that new adjustment form to the IRS website. I tried to run one through earlier, but the damn thing keeps flagging a field for "Report Code." Does anyone actually know what code you're supposed to plug in there?

I’m asking again—does anyone actually know anything about this reclassification form?
I need to move some funds from one income type to another (reclassifying tax and surcharges overpayments into health insurance premiums), but the form is asking for some kind of report code. I have no clue what to put in that field. Is there some extra step I need to take first to generate that code? How does this even work?

neonsurfer13 said:I’m asking again—does anyone actually know anything about this reclassification form?
I need to move some funds from one income type to another (reclassifying tax and surcharges overpayments into health insurance premiums), but the form is asking for some kind of report code. I have no clue what to put in that field. Is there some extra step I need to take first to generate that code? How does this even work?

That report identifier actually refers to the specific IRS Form 941 number. You have to input which Form 941 you're referencing, since the amounts you're reclassifying are tied directly to the payroll taxes reported on those forms.

Brenda Chase3 said:That report identifier actually refers to the specific IRS Form 941 number. You have to input which Form 941 you're referencing, since the amounts you're reclassifying are tied directly to the payroll taxes reported on those forms.

Look, there isn't an IRS form for this specific offset... I'm dealing with a debt here. Basically, I've got some extra cash sitting in one income category, and I just want to move it over to cover the balance on this other one.

neonsurfer13 said:Look, there isn't an IRS form for this specific offset... I'm dealing with a debt here. Basically, I've got some extra cash sitting in one income category, and I just want to move it over to cover the balance on this other one.

From what I understand—and please feel free to set me straight if my memory is failing me here—you can't just shuffle funds around however you please. It all depends strictly on the classification of the revenue; for instance, you wouldn't be able to offset local municipal tax revenue against federal tax revenue, or vice versa... at least, that's how they explained the logic to me over at the LAPD office. If I'm reading you correctly, though, you're looking to move funds between different types of state taxes and health insurance levies, right?

Keith Martinez5 said:From what I understand—and please feel free to set me straight if my memory is failing me here—you can't just shuffle funds around however you please. It all depends strictly on the classification of the revenue; for instance, you wouldn't be able to offset local municipal tax revenue against federal tax revenue, or vice versa... at least, that's how they explained the logic to me over at the LAPD office. If I'm reading you correctly, though, you're looking to move funds between different types of state taxes and health insurance levies, right?

Exactly. Moving from code 1619 to 8605. If you aren't allowed to shift money wherever you want, then what's even the point of this whole offsetting process?
I've got other amounts under different codes that I'd love to shuffle around too, but the reporting requirements make it a total nightmare.

neonsurfer13 said:Exactly. Moving from code 1619 to 8605. If you aren't allowed to shift money wherever you want, then what's even the point of this whole offsetting process?
I've got other amounts under different codes that I'd love to shuffle around too, but the reporting requirements make it a total nightmare.

The whole idea is to force you to book the transaction exactly where they dictate. 😠I’m actually planning to head down to the LAPD to figure out what’s going on with these entries—because if we can't get this sorted, I think our only move left is to file for a chargeback on the account we used for the subscription.

The FBI just told me I should just slap some random label on the report for now and then try to link everything later using an SNU form. Honestly, it sounds like a total headache. I have no clue how I’m supposed to merge all that data down the road, especially since half of this debt predates the current filing system.

I could use a quick answer here, I need to file my payroll report.

A small business owner I know has been on sick leave covered by Medicare for the entire eighth month. During that same month, they also paid out sick leave benefits (as non-taxable income).

The deadline to submit the JPP report for both the sick leave and the non-taxable benefit is September 15th.

Should I just send one single report that includes both items, or do I need to file two separate ones—one for each item?

Thanks,

Brandon Jackson4 said:I could use a quick answer here, I need to file my payroll report.

A small business owner I know has been on sick leave covered by Medicare for the entire eighth month. During that same month, they also paid out sick leave benefits (as non-taxable income).

The deadline to submit the JPP report for both the sick leave and the non-taxable benefit is September 15th.

Should I just send one single report that includes both items, or do I need to file two separate ones—one for each item?

Thanks,

Just send one single report and categorize everything correctly within it.

I need some help here... I'm dealing with card payments for the first time. A local auto electrician client just started taking credit cards, and now I'm stuck on how to book this properly. Do I record the card sales in the same month they happen, closing them out against cash, then immediately account for the sales tax and the cash receipt, and wait to book the processing fee until the money actually hits the bank?

Or

do I just wait until the funds hit the business checking account? Obviously, the amount will be lower because the processor already took their cut. In that case, do I wait until the deposit lands to book the full invoice against the bank transaction, and then just list the fee as a separate business expense?

I’ve asked a few consultants and gotten totally different answers, so now I’m just spinning my wheels. I'm sure you guys have covered this before, but I honestly don't have the time to dig through every single old thread... I'm genuinely lost on what the right way to handle this is.

Thanks.