Accounting for Sole Proprietors: Tax & Bookkeeping Tips

There’s actually a direct link to the IRS website right there on that page
https://www.irs.gov/newsroom/updates...58-news.html
It mentions that small business owners aren't permitted to pay out these bonuses to themselves—they can only distribute them to their employees—though it later suggests they could potentially take up to $416.66 (which is just $5,000 divided by 12) each month.
I haven't been able to dig up anything more detailed yet, so I'm wondering how this works for those who don't technically draw a regular salary? Would they need to file a separate quarterly tax return every month (in addition to the standard ones, essentially filing "empty" returns)?
And if that's the case, would these wouldn't even show up under expenses on the CPI forms, but rather just appear in the tax deduction section as a credit?

Edward Stewart said:There’s actually a direct link to the IRS website right there on that page
https://www.irs.gov/newsroom/updates...58-news.html
It mentions that small business owners aren't permitted to pay out these bonuses to themselves—they can only distribute them to their employees—though it later suggests they could potentially take up to $416.66 (which is just $5,000 divided by 12) each month.
I haven't been able to dig up anything more detailed yet, so I'm wondering how this works for those who don't technically draw a regular salary? Would they need to file a separate quarterly tax return every month (in addition to the standard ones, essentially filing "empty" returns)?
And if that's the case, would these wouldn't even show up under expenses on the CPI forms, but rather just appear in the tax deduction section as a credit?

The Fed folks claim business owners can pay themselves tax-free$1.75🤔
What now🙂

casualorca5 said:The Fed folks claim business owners can pay themselves tax-free$1.75🤔
What now🙂

I suppose we just sit tight and wait for someone with half a brain to show up. ☕

casualorca5 said:The Fed folks claim business owners can pay themselves tax-free$1.75🤔
What now🙂

If that were actually true, I highly doubt the U.S. Chamber of Commerce would be making such a fuss with the Secretary 😉

Hello everyone, I could really use some guidance here.

A small business owner is transferring field stipends and local travel reimbursements from their business account directly into their personal checking account...

I am looking for some clarity regarding the correct transaction models and how to format the reference numbers.

From what I have gathered regarding the payer details, I should be using US-ID-9999, though I am unsure what to enter for the final digit...

As for the recipient, the format seems to be US-ID-40002-code (with the field stipend code being 210)...

My main concern is, what happens if these transfers were already processed without including those specific details? All the standard tax filings and reports have been submitted correctly...

Thank you all so much in advance...

Edward Stewart said:I suppose we just sit tight and wait for someone with half a brain to show up. ☕

I certainly can—in fact, I just received an official notice from HOK today. It reads, "Dear Sir/Madam,"

Yesterday, the IRS website posted an announcement regarding tax-free payouts for performance bonuses and other types of supplemental employee incentives.
According to this rule, small business owners can also pay these bonuses to themselves via their business checking accounts, tax-free, through December 31, 2019.

Sincerely,

Secretary:
John Doe

Downloadable files:
SMALL BUSINESS OWNERS CAN PAY THEMSELVES TAX-FREE BONUSES.docx

Edward Stewart said:I suppose we just sit tight and wait for someone with half a brain to show up. ☕

I actually can—I just got the official notice from HOK today. It reads, "Dear Sir/Madam,"

Yesterday, the IRS website posted an announcement regarding tax-free payouts for performance bonuses and other types of supplemental employee incentives.
Under this specific rule, small business owners and independent contractors are also permitted to pay themselves these bonuses directly into their checking accounts, provided it's done by December 31, 2018.

Sincerely,

Secretary:
John Doe

Downloadable files:
SMALL BUSINESS OWNERS CAN PAY THEMSELVES TAX-FREE BONUSES.docx

Edward Stewart: I find myself reflecting on our previous discourse, much like how one might ponder the complexities of a legal brief after an exhausting day at the office. It is quite fascinating, isn't it? One moment we are discussing the mundane details of daily life, and the next, we are spiraling into these deep, philosophical inquiries that demand our undivided attention. I was just thinking about how much energy we expend on these debates, often without realizing the sheer weight of the implications involved. It reminds me of those long, winding discussions one might have over coffee in a quiet corner of a Seattle cafe—slow, methodical, and occasionally a bit overwhelming if you aren't prepared for the depth of the subject matter. Anyway, I suppose my point is that we should approach these matters with a certain level of grace and deliberation. What do you all think?

Keith Martinez5 said:I actually can—I just got the official notice from HOK today. It reads, "Dear Sir/Madam,"

Yesterday, the IRS website posted an announcement regarding tax-free payouts for performance bonuses and other types of supplemental employee incentives.
Under this specific rule, small business owners and independent contractors are also permitted to pay themselves these bonuses directly into their checking accounts, provided it's done by December 31, 2018.

Sincerely,

Secretary:
John Doe

Downloadable files:
SMALL BUSINESS OWNERS CAN PAY THEMSELVES TAX-FREE BONUSES.docx

I appreciate you sharing that link.
In the meantime, they’ve gone ahead and posted everything right there on the Chamber of Commerce website:
The latest briefing from the Chamber of Commerce really hits on something I’ve been ruminating over lately—that fundamental idea that when we advocate for better economic conditions, we aren't just shouting into a void for the sake of industry statistics; we are fighting for our own quality of life. It’s a sentiment that resonates deeply with me, much like those long, winding discussions one might have over coffee at a local diner in a town like Des Moines. The core message here is quite clear: the stability of the American economy isn't some abstract concept managed by bureaucrats in D.C.; it is the very foundation upon which our individual families and small businesses are built. When the Chamber of Commerce pushes for streamlined regulations or more predictable fiscal policies, they aren't just doing it for the big players or the massive conglomerates like ExxonMobil. No, they are doing it so that the person running a corner shop or the freelancer working out of a home office can actually plan for next year without fearing a sudden, catastrophic shift in the landscape. I find myself nodding along to the point that economic advocacy is, at its heart, an act of self-preservation. It’s easy to get lost in the weeds of policy jargon, but if you strip all that away, you're left with the simple truth that a healthy, functioning market allows us all to breathe a little easier. It provides that sense of security that lets you focus on your craft rather than constantly looking over your shoulder at the shifting tides of the economy. It's about dignity, really—the dignity of knowing that if you work hard and follow the rules, the system won't arbitrarily pull the rug out from under you. It’s a bit like a well-maintained highway; you don't think about it while you're driving, but the moment there's a pothole or a lane closure, everything grinds to a halt. We need those smooth roads to move forward, both personally and professionally.

I have been scouring through all the various examples for JOPPD provided on the Police Department website, yet I find myself unable to locate a specific instance that mirrors this particular scenario—specifically, I am wondering if one should be looking at sections 15.1, 15.2, 16.1, and 16.2 over on Page B? It is quite a puzzle, really. In my observations thus far, I have noticed that when dealing with JOPPD entries involving certain types of payouts, such as Christmas bonuses or performance awards, some records seem to date back strictly to the end of December (under code 18365), while other instances appear to be logged at any random point throughout the month. It is a bit inconsistent, isn't it?
Does anyone happen to have any additional sources or perhaps some further reading material regarding this particular subject? I find myself quite eager to delve deeper into the nuances of the matter.

Hey, I really need some help here

So, I just got my trash collection bill for $35, and there’s this note at the bottom saying $9.75 the city covers it. The payment slip is attached to the end of the bill, but the total amount is actually lower, down to $25, and now I'm totally stuck—how am I supposed to log this under the URU?

Edward Stewart said:Edward Stewart: I find myself reflecting on our previous discourse, much like how one might ponder the complexities of a legal brief after an exhausting day at the office. It is quite fascinating, isn't it? One moment we are discussing the mundane details of daily life, and the next, we are spiraling into these deep, philosophical inquiries that demand our undivided attention. I was just thinking about how much energy we expend on these debates, often without realizing the sheer weight of the implications involved. It reminds me of those long, winding discussions one might have over coffee in a quiet corner of a Seattle cafe—slow, methodical, and occasionally a bit overwhelming if you aren't prepared for the depth of the subject matter. Anyway, I suppose my point is that we should approach these matters with a certain level of grace and deliberation. What do you all think?

I appreciate you sharing that link.
In the meantime, they’ve gone ahead and posted everything right there on the Chamber of Commerce website:
The latest briefing from the Chamber of Commerce really hits on something I’ve been ruminating over lately—that fundamental idea that when we advocate for better economic conditions, we aren't just shouting into a void for the sake of industry statistics; we are fighting for our own quality of life. It’s a sentiment that resonates deeply with me, much like those long, winding discussions one might have over coffee at a local diner in a town like Des Moines. The core message here is quite clear: the stability of the American economy isn't some abstract concept managed by bureaucrats in D.C.; it is the very foundation upon which our individual families and small businesses are built. When the Chamber of Commerce pushes for streamlined regulations or more predictable fiscal policies, they aren't just doing it for the big players or the massive conglomerates like ExxonMobil. No, they are doing it so that the person running a corner shop or the freelancer working out of a home office can actually plan for next year without fearing a sudden, catastrophic shift in the landscape. I find myself nodding along to the point that economic advocacy is, at its heart, an act of self-preservation. It’s easy to get lost in the weeds of policy jargon, but if you strip all that away, you're left with the simple truth that a healthy, functioning market allows us all to breathe a little easier. It provides that sense of security that lets you focus on your craft rather than constantly looking over your shoulder at the shifting tides of the economy. It's about dignity, really—the dignity of knowing that if you work hard and follow the rules, the system won't arbitrarily pull the rug out from under you. It’s a bit like a well-maintained highway; you don't think about it while you're driving, but the moment there's a pothole or a lane closure, everything grinds to a halt. We need those smooth roads to move forward, both personally and professionally.

I have been scouring through all the various examples for JOPPD provided on the Police Department website, yet I find myself unable to locate a specific instance that mirrors this particular scenario—specifically, I am wondering if one should be looking at sections 15.1, 15.2, 16.1, and 16.2 over on Page B? It is quite a puzzle, really. In my observations thus far, I have noticed that when dealing with JOPPD entries involving certain types of payouts, such as Christmas bonuses or performance awards, some records seem to date back strictly to the end of December (under code 18365), while other instances appear to be logged at any random point throughout the month. It is a bit inconsistent, isn't it?
Does anyone happen to have any additional sources or perhaps some further reading material regarding this particular subject? I find myself quite eager to delve deeper into the nuances of the matter.

Yeah, there's zero documentation out there for Democratic Party filings specifically for small business owners and freelancers...
I'm guessing the process is identical to how you'd handle holiday pay or vacation reimbursement? Like, the way you fill it out and file the whole thing. Usually, the form has to be turned in by January 15th, but on the e-tax portal, you have to list the date as December 31st and select that specific report type.
My boss doesn't even have a business checking account because he pays us under the table, so now he’s gotta rush to open one just so he can actually receive this tax-free performance bonus...
If anyone actually knows the deal or knows what a Democratic Party filing should look like, please hit me up.

Thanks

For the December 2018 payroll, is the base amount the same as last year?

Are we calculating contributions using the old rates or those new ones (since there's no hiring happening)...?

Thanks

Brandon Jackson4 I can't even begin to describe how much this whole situation gets under my skin—it’s like someone took a sledgehammer to my sanity! Seriously, you see what’s happening? It’s absolutely ridiculous. I’m sitting here looking at the state of things and thinking, "Are we actually serious right now?" It feels like everything is just sliding downhill, and nobody seems to give a damn about the consequences. It’s like trying to fix a leaking dam with nothing but Scotch tape and wishful thinking. You know what I mean? Every time I think we've hit rock bottom, someone decides to start digging! It’s exhausting, man. Just pure, unadulterated chaos, and honestly, I'm about five minutes away from losing it completely.
So, I was looking back at the December 2018 payroll run—you know, that end-of-year madness where everything feels like a total circus—and it got me thinking: was the base pay calculation actually the same as what we did last year? Just trying to wrap my head around whether the math stayed consistent or if they pulled some sneaky move on the fundamentals during the holiday payout.

Are we calculating the contributions based on the old rates or these new ones? — especially since there’s basically zero hiring going on right now...

Thanks!

Look, let me break this down because the payroll math is getting messy—basically, if you’re looking at the paycheck for December 2018, you're still playing by the old rules and using those previous tax rates. But once we hit that January 2019 pay cycle—which, you know, actually hits your bank account in February—everything shifts. Those specific employment and workers' comp contributions? They're officially off the table. It's a total reset on those particular line items.

Hey there!

I’ve got two totally brain-dead questions for you guys!
I'm trying to wrap my head around how to book incoming invoices—specifically, what’s the deal when I'm buying stuff for an office where we provide professional services versus things that have absolutely nothing to do with the actual business?
Like, think about cleaning supplies, light bulbs, some cheap furniture, professional books, work uniforms, those monthly fees for our accounting software, or just basic office supplies?
For example, let's say I grab something on a retail receipt for the office totaling $42 (100 + sales tax)
. Do I just log this through the expense account as a regular business cost $42 so it doesn't fall under $42 (kind of like how you'd handle utility bills, union dues, or postage)? Or $42 do I record the full invoice amount and then claim the sales tax deduction $8.25?
Thanks a ton for the help!

Olivia Cruz86 said:Hey there!

I’ve got two totally brain-dead questions for you guys!
I'm trying to wrap my head around how to book incoming invoices—specifically, what’s the deal when I'm buying stuff for an office where we provide professional services versus things that have absolutely nothing to do with the actual business?
Like, think about cleaning supplies, light bulbs, some cheap furniture, professional books, work uniforms, those monthly fees for our accounting software, or just basic office supplies?
For example, let's say I grab something on a retail receipt for the office totaling $42 (100 + sales tax)
. Do I just log this through the expense account as a regular business cost $42 so it doesn't fall under $42 (kind of like how you'd handle utility bills, union dues, or postage)? Or $42 do I record the full invoice amount and then claim the sales tax deduction $8.25?
Thanks a ton for the help!

If those utility bills are issued in the company's name, then you can absolutely claim the sales tax credit; I'm not sure why you mentioned that credits aren't recognized for utilities. The only time you can't claim the credit is if the bills aren't made out to the business.
Office supplies and general equipment are recorded normally, and the sales tax is deductible. It doesn't matter if the nature of your core business is different; the office is a fundamental part of the company and necessary for operations, which means office expenses are fully recognized and the sales tax is deductible.

Brenda Chase3 said:If those utility bills are issued in the company's name, then you can absolutely claim the sales tax credit; I'm not sure why you mentioned that credits aren't recognized for utilities. The only time you can't claim the credit is if the bills aren't made out to the business.
Office supplies and general equipment are recorded normally, and the sales tax is deductible. It doesn't matter if the nature of your core business is different; the office is a fundamental part of the company and necessary for operations, which means office expenses are fully recognized and the sales tax is deductible.

Okay, so here's the deal—he bought the place privately, and the deed is under his name and his wife's name, but he’s registered there as a sole proprietor.
Now, regarding the utilities (electricity, water, gas, trash, etc.)—some of the bills are in his personal name at the office address, while others are specifically under his business name. He falls into that category of a sole proprietor. Up until now, all the utility costs were being booked as full expenses, except for the cell phone, landline, and internet where we were just deducting the sales tax... but honestly, I'm lost now. What's the right way to do this? How should the bills actually be addressed so everything stays above board?

Hey everyone,
I have a bit of a question regarding depreciation calculations within our Microsoft inventory module. Back in March 2018, we picked up a vehicle for $3.25—just a heads-up, there’s no sales tax on the invoice since it was bought from a private seller who isn't part of the formal tax system, and the car was pretty banged up from an accident. Later on, in September 2018, we sold that same vehicle for $4.75, which includes sales tax. I went ahead and calculated the depreciation through September 30, 2018, coming out to $389. Now, here is where things get a little tricky: when I pull the DI report, the vehicle shows as 100% written off and the depreciation has been applied, but the purchase value seems to have jumped from $3.25 to $6277—essentially increasing by the amount of the uncalculated depreciation. Should I be recording that $2944 difference somewhere in the books as a base figure or something similar? Or is there a better way to handle this? Thanks a million for any help!!!

Just doing a quick double-check for this year... If we're talking about paying out those vocational training measures—you know, the fifty-fifty split—does the payment from the U.S. Department of Labor go straight into the contractor's account? Seems like it does to me, but I need a confirmation.

Benjamin Phillips75 said:Just doing a quick double-check for this year... If we're talking about paying out those vocational training measures—you know, the fifty-fifty split—does the payment from the U.S. Department of Labor go straight into the contractor's account? Seems like it does to me, but I need a confirmation.

From what I understand, yes, it definitely does...

Benjamin Phillips75 said:Just doing a quick double-check for this year... If we're talking about paying out those vocational training measures—you know, the fifty-fifty split—does the payment from the U.S. Department of Labor go straight into the contractor's account? Seems like it does to me, but I need a confirmation.

It definitely counts.

Hi everyone,
Has anyone here actually successfully submitted their payroll tax filings for a small business for January 2019? I tried running everything today—I followed all the guidelines provided by Microsoft to the letter—but when I try to process it for the sole proprietor, I just keep hitting an error wall.
The system says: "For the total amount, the value in column 12 must equal the base amount divided by the number of days in the month multiplied by the number of insured days."
Then it adds: "For the receipt code, the amount in column 12.3 must be equal to the product of the contribution base and the prescribed Social Security rate."
"For the receipt code, the amount in column 12.5 must be equal to the product of the contribution base and the prescribed employment insurance rate." "For the receipt code, the amount in column 12.4 must be equal to the product of the contribution base and the prescribed occupational health insurance rate."

I’m honestly stumped—I don't see where the math is breaking down. I set the base at $5,491.20 with a combined 20% rate (15% + 5%), plus the standard 16.5% for Social Security... and I left the occupational health and employment insurance fields at zero.
Thanks so much for any help!