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#2
12-15-2003, 03:01 PM
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 Re: Revenue/Income for Sole prop w/cash accounting Hedberg wrote: - quote - > I have a consulting business in which I hire subcontractors
My question to you is why wait to pay subs after Dec 31st?> and suppliers. It's calendar year and cash accounting. If > I receive a payment from a client in 2003 does all the money > necessarily become part of my 2003 income or is there a way > to retain earnings in a business account without either > paying it to a supplier or to a subcontractor? > My problem is that I'm going to receive a sizeable payment > at the end of this year much of which will be used to pay > bills to subcontractors. These payments to subs will be > made in January 2004 and will for the most part be reflected > in 2004 1099 forms. If I have to take it as income in 2003 > and deduct it from income in 2004 (when I pay make the > payments) I will incur a pretty big tax hit this year > including S.E. tax. The payment to me will be reflected in > the 1099 that I receive from the customer and I therefore > assume that I need to fastidiously account for the revenue > in some manner. You need the tax deductions for 2003 it seems, so even if you have to forego the annual new year's even party and write checks way into the night (AND mail them!) do it. Christmas Cheer$, Harlan Lunsford, EA n LA << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#1
12-15-2003, 02:03 PM
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| Re: Revenue/Income for Sole prop w/cash accounting "Hedberg" <hhedberg[at]swbell.net> wrote - quote - > I have a consulting business in which I hire subcontractors
The only thing I can think of is it's not revenue (because> and suppliers. It's calendar year and cash accounting. If > I receive a payment from a client in 2003 does all the money > necessarily become part of my 2003 income or is there a way > to retain earnings in a business account without either > paying it to a supplier or to a subcontractor? > My problem is that I'm going to receive a sizeable payment > at the end of this year much of which will be used to pay > bills to subcontractors. These payments to subs will be > made in January 2004 and will for the most part be reflected > in 2004 1099 forms. If I have to take it as income in 2003 > and deduct it from income in 2004 (when I pay make the > payments) I will incur a pretty big tax hit this year > including S.E. tax. The payment to me will be reflected in > the 1099 that I receive from the customer and I therefore > assume that I need to fastidiously account for the revenue > in some manner. it's not yet earned), but it is a "deposit" from a client on future work. The facts and circumstances dictate if this is the case. -- Paul A. Thomas, CPA taxman at negia.net << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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12-15-2003, 01:44 PM
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| Re: Revenue/Income for Sole prop w/cash accounting - quote - > I have a consulting business in which I hire subcontractors
Yes it does. It is called constructive receipt and as long> and suppliers. It's calendar year and cash accounting. If > I receive a payment from a client in 2003 does all the money > necessarily become part of my 2003 as you have the ability to put your hand on that check in 2003, it is income in 2003. Helen, EA in PA Member of The Tax Gang President, PA Society of Enrolled Agents Campaigning for NAEA Board of Directors - Looking for YOUR vote << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#-1
12-14-2003, 07:58 AM
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| Revenue/Income for Sole prop w/cash accounting I have a consulting business in which I hire subcontractors and suppliers. It's calendar year and cash accounting. If I receive a payment from a client in 2003 does all the money necessarily become part of my 2003 income or is there a way to retain earnings in a business account without either paying it to a supplier or to a subcontractor? My problem is that I'm going to receive a sizeable payment at the end of this year much of which will be used to pay bills to subcontractors. These payments to subs will be made in January 2004 and will for the most part be reflected in 2004 1099 forms. If I have to take it as income in 2003 and deduct it from income in 2004 (when I pay make the payments) I will incur a pretty big tax hit this year including S.E. tax. The payment to me will be reflected in the 1099 that I receive from the customer and I therefore assume that I need to fastidiously account for the revenue in some manner. Thanks very much for any thought you folks might have about this sort of question. H.S. Hedberg << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
| Tags |
| accounting, prop, revenue or income, sole, w or cash |
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