posted on August 18, 2001 06:47:16 AM new
Lets say in June you had $1000 worth of auctions end.
Fos tax purposes do you claim $1000 in income for June?
Point being, as you know with auctions, that $1000 is potential. You haven't been paid for those yet. With deadbeats and the like you might only make $900.
So, if you claimed $1000 for June, and only received $900.. you would have exaggerated your income (not good for taxes!).
posted on August 18, 2001 07:21:03 AM new
is 1000 sales/gross revenue??
do you substract cost of sales?
dont tell me your cost of sales =zero??
then from sales - cost of sales comes gross profit,net it against your operating expenses come income before tax.
that the number you report -income before tax.
for corporate accounting,you recognise sales when item is shipped,so for individual you should also recognise sales when item is sold and shipped.
when item is shipped-
credit sales and debit receivables
when payment arrives,debit cash and credit receivables,this is the case if you extend credit.
on cash basis,you debit cash and credit sales when payment is received
posted on August 18, 2001 08:28:49 AM new
Florida sales taxes are due on the first of the following month and late after the 20th. If I have Florida sales in June that aren't paid for by the 15th of July when I fill out my tax form, I cut and paste them into July's spreadsheet and will have collected (or relisted) by August 15th when I prepare form for July's sales. My widgets are mostly under $20, so relisting is no big deal and I don't let buyers ride very long.
This usually results in accurate figures for quarterly estimated payments for self-employment tax as well, moving a sale forward one month I don't think distorts things much.
posted on August 18, 2001 11:31:00 AM new
Assuming you're just filing a Schedule C, businesses can be run on a "cash" or "accrual" basis. Most businesses where you have an inventory are run on an "accrual" basis. If you sell a "service", those are often run on a "cash" basis.
For "accrual" accounting, you count the sale when you send out the invoice, not when you receive payment. You count bills when you get them, not when you pay. You can (of course) get a credit for a "bad debt" in the event you're not paid for a sale recorded in a previous period.
Please talk to an accountant to get answers to your specific questions, especially if you're not the type that likes reading lots of legal terms & concepts. It's best to get help before you get too involved doing things the wrong way... If you're selling things on eBay, it's almost certain that an "accrual" basis will be appropriate for your "Schedule C" business.
posted on August 18, 2001 08:25:00 PM new
accrual accounting,before you send invoice,you should ship the goods out.
corporation usually do their invoicing at nite
posted on August 21, 2001 07:42:10 AM new
http://www.nolo.com/encyclopedia/articles/sb/cash.html
Provides a good definition of accrual accounting.
What I do is recognize the income in the month the auction closed in - and set up a receivable for any items that are unpaid at the end of the month. 90% of these are paid off in the next month. The entry would be something like this.
Accounts Receivable Debit $100
Revenue - Ebay sales Credit $100
Entry made in the month of the sale (Say June)
Cash Debit $100
Accounts Receivable Credit $100
Entry made in month of payment being received (say July)
A similar thing is done for bills charged in one month and paid in another - such as Ebay fees.
Fees - Ebay Debit $50
Accounts Payable Credit $50
Entry made in month fees were charged (Say June)
Accounts Payable Debit $50
Cash Credit $50
Entry made in month fees were paid (Say July)
For larger companies or auctioneers, they might set up an Allowance for Doubtful accounts to run write-offs through. For a small seller its probably sufficient to just do a direct write-off against revenue.
So from my example up above where we had $100 in sales in June, let say $90 of payments were received and the other $10 was a NPB and we filed for FVF in July. The entry would now be
