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Old 27th March 2013, 03:29 PM   #1
michael187
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Join Date: Feb 2013
Location: New York
Posts: 3
Default Accounting For Sole Proprietorship

I am thinking of selling my handmade art works at a local craft market once a month (as sole proprietorship). Can someone recommend me how to organize my accounting in this case?

1) Do I need to use any type of accounting software (e.g.QuickBooks) and do I need to register all transactions in there? If I use a separate (business) bank account all my transaction will be already listed in there... so why do I need to do this again in QuickBooks while I can get a statement from my business account?

2) If I sell my works for cash, how to I register these transactions? I saw a lot of sellers at this craft market sell things for cash and don't give buyers a receipt.

3) If I have some expanses that I pay in cash. e.g. I pay to another artist for a part that I cannot do myself. How do I register these transactions and what prove do I have to write it off taxes?

4) I use 1040 Schedule C when I file taxes. I have read somewhere that I need to pay taxes quarterly... how does it work? Do I transfer money to IRS quartelly?

Thank you
Michael

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Old 28th March 2013, 02:02 PM   #2
jgbreeden
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Join Date: Jun 2011
Location: San Diego
Posts: 77

Default

Software isn't required, but it doesn't take much activity before it's well worth it. If you have used a Schedule C, then you know what numbers you need, so it's just a question of how you add them all up.

The money you spend is not the same as expenses. For example, paying a credit card or other debt is not an expense, and purchases of equipment that will last more than a year must be depreciated. So your expenses will not match your bank account. Accounting software will help you track all of that.

To me, reconciling the bank statement to your accounting software is a good way to make sure you did not lose any receipts.

Cash transactions with no receipts are usually unreported, and skirting tax laws.

If you pay for anything with cash, and you want to write that off as expense, you should get a receipt to CYA.

If you end up owing tax at the end of the year, the IRS will want you to make estimated payments the next year so you are closer to "balanced" by the end of the year.


Last edited by jgbreeden; 28th March 2013 at 02:04 PM.
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