Accounting for Sole Proprietors: Tax & Bookkeeping Tips

Hey everyone... quick question regarding my bookkeeping—should I be recording a tax refund from the FBI as non-operating income, or does it go somewhere else? Thanks in advance for any insight you can share! 🙂

Keith Martinez5 said:Hey everyone... quick question regarding my bookkeeping—should I be recording a tax refund from the FBI as non-operating income, or does it go somewhere else? Thanks in advance for any insight you can share! 🙂

Yeah

Thanks, lili.p! I actually have another question—I already posted this over in the tax filing thread, but maybe someone here can help me out too. Our business is going to be closed from January 2nd through January 5th. Does anyone know how we should report those non-working days in the IRS portal? I found the section for reporting sales records, but I’m honestly a little lost on the exact steps to take. I’m really nervous about inputting something incorrectly—especially after seeing that news story about someone getting hit with a massive fine just for a tiny clerical error...

Keith Martinez5 said:Thanks, lili.p! I actually have another question—I already posted this over in the tax filing thread, but maybe someone here can help me out too. Our business is going to be closed from January 2nd through January 5th. Does anyone know how we should report those non-working days in the IRS portal? I found the section for reporting sales records, but I’m honestly a little lost on the exact steps to take. I’m really nervous about inputting something incorrectly—especially after seeing that news story about someone getting hit with a massive fine just for a tiny clerical error...

That fear is pretty universal. Check out this thread 😁

Basically, you go under Business Premises -> Status -> Temporarily Closed -> enter your dates -> select the reason (like "Annual Vacation") and you're done.
Just don't forget to mark yourself as open again once you're back in business.

Henry Edwards33 said:That fear is pretty universal. Check out this thread 😁

Basically, you go under Business Premises -> Status -> Temporarily Closed -> enter your dates -> select the reason (like "Annual Vacation") and you're done.
Just don't forget to mark yourself as open again once you're back in business.

Seriously, thanks a million—you're a lifesaver! 👍👍👍

Help me out here
I just processed my first card payment through an online service today, even though my bank won't actually drop the cash into my account for another 30 days.
I'm planning to ship the goods tomorrow or maybe Monday. What’s the actual deadline for me to Invoice this under the Internal Revenue Code?
Does it have to be done right this second, or can I wait until tomorrow when the items actually go out?

Oh, one more thing... on that Invoice, am I supposed to include that note about "payment based on collected fee"... even though I haven't technically collected anything yet since the money is tied up for a month, but I need to issue the bill now?

neonsurfer13 said:Help me out here
I just processed my first card payment through an online service today, even though my bank won't actually drop the cash into my account for another 30 days.
I'm planning to ship the goods tomorrow or maybe Monday. What’s the actual deadline for me to Invoice this under the Internal Revenue Code?
Does it have to be done right this second, or can I wait until tomorrow when the items actually go out?

Oh, one more thing... on that Invoice, am I supposed to include that note about "payment based on collected fee"... even though I haven't technically collected anything yet since the money is tied up for a month, but I need to issue the bill now?

Here is how I handle things: any time a customer pays by card, those transactions get invoiced immediately—it's because under the Internal Revenue Code, a card swipe is treated essentially the same as handing over cash. Since I run my own small business, I don't officially "close out" the invoice until the money actually hits my bank account; I match it to the exact amount received, and then I just write off whatever the bank took for their processing fee as a business expense. As for that specific note about "Settlement based on collected fees," I believe that's mainly for businesses handling VAT-style tax settlements on a cash basis. Hopefully, that clears things up a bit!...

Alright, thanks... I finally got everything filed with the IRS yesterday.

Is it actually worth keeping my kid on the tax credit as a dependent, or should I just hire them through a temp agency? I’m getting absolutely hammered by the highest income tax bracket right now.

Hello there; I’m honestly not entirely certain if I’ve landed in the right thread here. I run my own small business, and since I haven't registered for sales tax, I assume I'm just being taxed on my income, correct?
Here is my dilemma: I have spent the entire year being incredibly careful to ensure my total amount to Invoice doesn't exceed the $300,000 threshold so I can avoid being forced into the sales tax system. But now, my accountant is telling me that they don't care about what I've actually invoiced—they care about the actual cash hitting my bank account. As it stands, with a deposit that cleared this morning, my total incoming transfers for the year have officially hit $101. Does the government look at the gross revenue from the services provided (what was actually Invoiced), or are they looking at the raw cash flow (the difference between what comes in and what goes out)?

On a separate note: if I am indeed forced to register for sales tax, how much of a massive headache am I looking at? Am I going to end up with significantly less money in my pocket at the end of the day??

Dammit! This is the first time in my life I’ve felt genuinely angry that someone actually paid me ten days ahead of schedule!!! To hell with them, honestly.

Timothy Torres3 said:Hello there; I’m honestly not entirely certain if I’ve landed in the right thread here. I run my own small business, and since I haven't registered for sales tax, I assume I'm just being taxed on my income, correct?
Here is my dilemma: I have spent the entire year being incredibly careful to ensure my total amount to Invoice doesn't exceed the $300,000 threshold so I can avoid being forced into the sales tax system. But now, my accountant is telling me that they don't care about what I've actually invoiced—they care about the actual cash hitting my bank account. As it stands, with a deposit that cleared this morning, my total incoming transfers for the year have officially hit $101. Does the government look at the gross revenue from the services provided (what was actually Invoiced), or are they looking at the raw cash flow (the difference between what comes in and what goes out)?

On a separate note: if I am indeed forced to register for sales tax, how much of a massive headache am I looking at? Am I going to end up with significantly less money in my pocket at the end of the day??

Dammit! This is the first time in my life I’ve felt genuinely angry that someone actually paid me ten days ahead of schedule!!! To hell with them, honestly.

It's based on completed deliveries of goods and services.
Not what was collected.
Check sections 39 and 40 of the Internal Revenue Code; certain transactions aren't counted toward the value of deliveries $100000. The sale of capital assets doesn't count either.
Enjoy the holidays 👍

I’m trying to log our hours for Sunday, December 31st—even though we don't normally work Sundays. When registering business hours, there’s an option for EXCEPTIONAL HOURS, right? I entered the date and time, checked the box, but now the SAVE button is grayed out and unclickable. Now I'm freaking out—did I mess this up? I've called the IRS and sent an email, but obviously, I'm getting zero response. Can anyone actually help me out here?

Is it permissible for a small business owner to pay for their own annual public transit pass (specifically for commuting to and from work)? The company doesn't own any vehicles, nor does it reimburse for local driving; we just issue occasional travel vouchers for more distant trips.

Are small business owners actually required to maintain an inventory log for low-value items, similar to how they have to track long-term fixed assets?

I could really use some advice here.
I currently run a small business—registered as a sole proprietorship, VAT-paying, retail-focused—but I’m looking to switch over to a simplified tax regime. The new maximum revenue threshold of $100000 aligns perfectly with my projected growth and what I actually pulled in over the last two years (in 2017, my total receipts were roughly $71000 including VAT, all via electronic payments). When I went down to the IRS office to ask about the transition, they basically told me it would be treated the exact same way as if I were shutting down the entire business. Here’s the complication: my business assets include a vehicle that I registered at 70% of its value ($25283) and used to claim 70% input tax credits. I’ve been depreciating it using various rates based on my income, so as of the end of 2016, its book value sits at $21,490.41.
Since I handle my own bookkeeping, I’m honestly stuck on the best way to execute this transition without making a mess of things.
Thanks in advance.

I haven't really done business with clients outside the States before, but an opportunity just popped up. The buyer is a private individual located in Canada, which means they're outside the US.
Do I need to list any sales tax on the invoice or the quote? Whose responsibility is the tax here, and what does the bookkeeping look like for me down the road?
I already have an EIN if that’s what’s needed—basically, do I need to coordinate this through a freight forwarder or how does it work?
Thanks

Following up on my last post... look, here's the deal. I buy my stock from my supplier and pay the full amount including sales tax. Then, I sell that exact same stuff to a regular customer over in Canada. I'm assuming I don't charge them any sales tax there, right? Like, they just pay me the base price?
So, how am I supposed to log that outgoing invoice in my books? Which boxes am I actually supposed to be filling out?

Hey everyone!

I’ve got a bit of a headache regarding interest rates here.
So, we have a client who needs to invoice for late payment interest—basically, they received our portion of the costs plus interest on those costs due to some forced collection/foreclosure proceedings involving a law firm.
What’s the best way to handle this? I’m totally stuck on how the bookkeeping should actually look for something like this.
If anyone out there knows the drill, please help a person out.

Thanks,lp

Hey, I need some help here... I’ve been so buried in back-to-back client meetings that I’ve completely neglected everything regarding AML and terrorist financing regulations over the last few years. On top of that, I see the laws have changed recently. For a solo practitioner—like a freelance bookkeeper or a small LLC owner—what specific documentation and compliance stuff am I actually required to have on hand under these new rules? What acts should I be looking at, and where can I find actual templates or examples online? I’m still sitting on old files from way back in 2013. Has everything been overhauled since then?

Thanks a million...

Quick question regarding sick leave—I’ve actually never had an employee go out on medical leave before, so I'm navigating this for the first time... My understanding is that the employer covers the full salary for the first 42 days, and after that, the responsibility shifts over to Medicare. A lady at the Medicare office mentioned to me that they only reimburse 70% of the salary once those initial 42 days have passed. So, here’s my dilemma: am I allowed to keep paying the employee their usual full salary as I have been doing—minus commuting costs, obviously—even though Medicare is only kicking back 70%? In terms of bookkeeping, can I list the entire amount I pay them as a business expense, while recording that 70% reimbursement from Medicare as income? Thanks in advance for the help! P.S.: I'm not a professional accountant; I just handle the books for my own small business...