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Old 02-21-2018, 07:00 PM
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Question Putting on an Event January 2019: Registration Revenue in 2018; Expenses in 2019

I'm putting on a big event in January 2019 (in California, if that matters) where just about all the revenue (something like $40K) will come in late 2018 and nearly all the money will go out in early 2019. The event might roughly break even, so how in general would I arrange to pay taxes on just the net, if any, once all the dust has settled?

Would I set up some entity to take the revenue and pay expenses in the meantime, then just withdraw the net as taxable income after the event? Or can I somehow just not treat that advance registration revenue as 2018 income?



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Old 02-22-2018, 12:07 AM
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I'm putting on a big event in January 2019 (in California, if that matters) where just about all the revenue (something like $40K) will come in late 2018 and nearly all the money will go out in early 2019. The event might roughly break even, so how in general would I arrange to pay taxes on just the net, if any, once all the dust has settled? ======>It depends which accounting method you/your biz use; Many businesses have found that they can minimize business taxes year-to-year by considering carefully when to make payments to increase expenses and tax deductions and push receipts to create income at the end of the tax year. I mean Accounting methods refer to the basic rules and guidelines under which businesses keep their financial records and prepare their financial reports. However I believe that you use cash method. The cash method is the more commonly used method of accounting in small business. Then , you on your 2018 return you must report your income and claim your biz related expenses on your 2019aslongas you sent bills. you need to recognize the income when it is received in 2018 and the expense when the bill is sent in 2019.say, you do work for a customer on December 30 worth $300. You bill this customer the $300 December 31. In cash accounting, the amount you billed isn't counted as income, because you haven't received the money.

Would I set up some entity to take the revenue and pay expenses in the meantime, then just withdraw the net as taxable income after the event? ======>>it is up to you if you want to set up some entity to take the revenue and pay expenses; if you are a sole owner, I mean a contractor, filing Sch C of 1040, youdo not actually need to set up another entity; If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed.you need to report your income and biz related deductible expenses on the same Sch C opf 1040; as said you must report your income on you r 2018 Sch C of 1040 and claim expenses on your 2019 Sch C pf 1040 if you a re a cash method taxpayer.
Or can I somehow just not treat that advance registration revenue as 2018 income?=======>no as said you , since you receive income in late 2018, must report it on your 2018 return UNLESS you and the payer agree to pay you later after 2018. .



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Old 02-22-2018, 08:25 PM
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Will Accrual Basis accounting take care of this?

I'm starting the Sole Proprietorship from scratch, so I think I could start up using accrual-based accounting and thereby recognize revenue when it's earned. In this case, that would be when the event happens, in 2019, yes? A relevant article suggests that you can do that if you reflect that in your "financial statements". (There's a very pertinent example in that article regarding prepaid dance classes.) If that's about right, then what would constitute those "financial statements"? Annual P&L summaries?



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Old 02-23-2018, 02:22 AM
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Originally Posted by dtronvig View Post
I'm starting the Sole Proprietorship from scratch, so I think I could start up using accrual-based accounting and thereby recognize revenue when it's earned. In this case, that would be when the event happens, in 2019, yes? A relevant article suggests that you can do that if you reflect that in your "financial statements". (There's a very pertinent example in that article regarding prepaid dance classes.) If that's about right, then what would constitute those "financial statements"? Annual P&L summaries?
I'm starting the Sole Proprietorship from scratch, so I think I could start up using accrual-based accounting and thereby recognize revenue when it's earned.====>Then as said it is correct you need to rep[ort the income in 2018 when it is actually earned and need to report expenses in the year when it is incurred.

In this case, that would be when the event happens, in 2019, yes?===========>yes as said.

A relevant article suggests that you can do that if you reflect that in your "financial statements". (There's a very pertinent example in that article regarding prepaid dance classes.) If that's about right, then what would constitute those "financial statements"? Annual P&L summaries=======>F/S includes P&L stmt( I mean income stmt); The four main financial statements for a small business include the income statement, the balance sheet, the statement of cash flow and the statement of owner's equity. However in your case as a sole owner of the sole proprietorship you usually need income statement rather than C/F stmt or B/S



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