Accounting for Sole Proprietors: Tax & Bookkeeping Tips

Greetings, everyone... I find myself a bit stuck on how to properly tally up the income tax and surtax for a sole proprietor when filling out the DOH form. When I look at my tax statements, I see account 1430, but it seems to only reflect the data from 2017—is that correct, or am I missing something?

We are subject to income tax and VAT, which we settle based on collected invoices. We have an outstanding receivable stemming from a pre-bankruptcy settlement dating all the way back to 2014. To be perfectly honest, nothing was ever paid voluntarily according to the original schedule; instead, we had to initiate legal collections for every single installment agreed upon. There is currently just one final payment remaining. We haven't recorded a bad debt write-off in our books yet, primarily because the full amount hasn't been settled up to this point. I suppose my question is, are we technically behind on our value adjustments? Specifically, under US income tax regulations, can the written-off portion of a receivable be claimed as a business expense, and if so, at what exact timing? Furthermore, I am somewhat uncertain about how to handle the VAT implications regarding that written-off portion.

Eric Adams2 said:Greetings, everyone... I find myself a bit stuck on how to properly tally up the income tax and surtax for a sole proprietor when filling out the DOH form. When I look at my tax statements, I see account 1430, but it seems to only reflect the data from 2017—is that correct, or am I missing something?

Account 1430 was paid in 2017, similar to how an employee W-2 works, though you'd subtract any interest penalties. At least, that is how I presented it. I suppose there have been various interpretations in previous years.🙄

Hey, has anyone actually managed to file their tax return through the IRS website without it glitching out?

Mine keeps getting rejected even though I’m using the simplest form possible. It keeps throwing these error messages that make zero sense. Honestly, it’s driving me insane...😠

Now I'm stuck because of these bogus errors, even though everything I entered is 100% accurate. There's no way the income figures could be any different...

Arthur Bishop6 said:Hey, has anyone actually managed to file their tax return through the IRS website without it glitching out?

Mine keeps getting rejected even though I’m using the simplest form possible. It keeps throwing these error messages that make zero sense. Honestly, it’s driving me insane...😠

Now I'm stuck because of these bogus errors, even though everything I entered is 100% accurate. There's no way the income figures could be any different...

Just take a deep breath and try to stay calm. When those errors pop up, try to trace them back step-by-step; usually, there's some tiny detail missing or a sum that needs adjusting somewhere in the fine print. Good luck!

Eric Adams2 said:Just take a deep breath and try to stay calm. When those errors pop up, try to trace them back step-by-step; usually, there's some tiny detail missing or a sum that needs adjusting somewhere in the fine print. Good luck!

Yeah, "take it easy" is great advice, except I already missed my deadline. Real helpful.🎉

One more thing—on the federal payroll tax form, does a sole proprietor count as an employee? Since a small business owner doesn't technically have "staff," do I put 1 (for myself) or 0? Because if I put 0, the system throws a warning at me.

So, does that mean we aren't using the KD form this year?

Christian Cruz41 said:So, does that mean we aren't using the KD form this year?

The KFC form is still valid.
It goes along with the CDC, though I suppose it's unclear if the CDC handles physical paperwork.🤔

Can someone give me a quick rundown on what tax-deductible income or expenses actually are? Why do they matter so much in accounting? I’m looking for a plain English explanation, not some textbook definition. Thanks!

Is filing that CDC form through the e-tax portal mandatory this year, or can I still just drop off the paperwork?

I have a quick question regarding how income should be reported for sole proprietors:
In the updated tax forms, I noticed the line for "receipts from excessive shortages" has been removed. Does anyone know where those receipts should be added now? Also, does this mean if I'm reporting a transfer of assets, I'll end up having to list them twice?

casualorca5 said:The KFC form is still valid.
It goes along with the CDC, though I suppose it's unclear if the CDC handles physical paperwork.🤔

Apparently, you can just attach the KFC form as a PDF attachment... I haven't actually tested it out yet, but that's what I was told to do.

I messed up a sales receipt due to some glitch, so I had to void the whole thing and issue a brand new one. Since I haven't really dealt with official IRS-compliant digital receipts before, I'm a bit lost on how to actually log this in the books.
Do I record the "wrong" receipt first, then enter a negative amount for the void, and finally log the corrected receipt? Or do I just skip the mistake entirely and only enter the final, correct one?

A voided transaction is just a standard receipt with its own unique number; the only difference is the amount shows up as a negative. And yes, those voids still need to be reported through the fiscal system. After that, you just go right back to processing regular invoices as usual.

Thanks for the previous answer, but I’ve got another question for you.
My small business is registered for sales tax. How am I supposed to log input invoices that don't have any sales tax applied—specifically those from vendors who aren't registered for sales tax?

Also, how does an invoice like that get recorded in my cash receipts and disbursements journal? Where does it actually go?

Hey there,

Does anyone know how the hell I can attach files to the DOH form through the IRS portal?
I’ve got birth certificates and a bunch of other paperwork I need to upload, but the system isn't making it obvious at all—how do I actually do this?

thanks

Olivia Cruz86 said:Hey there,

Does anyone know how the hell I can attach files to the DOH form through the IRS portal?
I’ve got birth certificates and a bunch of other paperwork I need to upload, but the system isn't making it obvious at all—how do I actually do this?

thanks

Once you've signed and sent the DOH, just head over to your sent forms—look for the little green or blue checkbox, and there should be an option to attach documents in the dropdown menu. It’s gotta be a PDF, though.

If a small business owner is out on sick leave for more than 42 days and receives payments from CMS directly into their bank account, should those funds be recorded as income in the KPI?

Thanks.

Brandon Jackson4 said:If a small business owner is out on sick leave for more than 42 days and receives payments from CMS directly into their bank account, should those funds be recorded as income in the KPI?

Thanks.

No, they aren't. It isn't considered taxable income.👍

Regarding my interest in JPMorgan Chase—specifically concerning the payout of interest or dividends... should I proactively upload a PDF document to the portal, or is it safe to assume the IRS already has all the necessary data on file?
Perhaps I could simply include the specific account number in the notes section to be thorough?