How do I include for tax purposes work I did in 2012 but received payment for in 2013? Does it count for 2012 or 2013? My business is currently a sole proprietorship, if that makes any difference. And since I only went live in November, I will most definitely be in the red for the year. Thanks for your help! KC Reid Deeper Roots www.finddeeperroots.com

It all depends on if your business is cash based (when payment actually received) or accrual based (when income is earned ie the work is done). Most genealogists I know, including myself, are cash based. I have not thoroughly read through this link (my disclaimer) but Wikipedia gives an overview of the differences: [http://en.wikipedia.org/wiki/Comparison_of_cash_and_accrual_methods_of_accounting] http://en.wikipedia.org/wiki/Comparison_of_cash_and_accrual_methods_of_accounting Also, it is common in the first year of a business to have a loss. You can amortize the start-up loss over a period of time. I would seek professional tax advice, especially in your first year of business. Maybe other tax professionals can weigh in too. Phyllis Garratt IRS Registered Tax Return Preparer -----Original Message----- From: "Molly" <mkcindc@yahoo.com> Subject: [TGF] Tax question How do I include for tax purposes work I did in 2012 but received payment for in 2013? Does it count for 2012 or 2013? My business is currently a sole proprietorship, if that makes any difference.

I'm not a tax professional. I will say the money I spend for my CPA is one of my essential business expenses and this is not an area where I would scrimp. There are some good docs on the IRS web site and maybe also on the Small Business administration site. A search in the archives for references to /Self-Employed Tax Solutions///by June Walker (Globe Pequot Press, 2009) will also turn up some useful discussions. This book was discussed and recommended last year or the year before. It would have been very useful to have when I was starting my business. Regards, Debbie Debbie Parker Wayne, CG(SM) -- Wayne Research <http://debbiewayne.com/> -- Deb's Delvings Blog <http://debsdelvings.blogspot.com/> CG and Certified Genealogist are service marks of the Board for Certification of Genealogists®, used under license by associates who meet prescribed genealogical competency standards. pgarratt@gessert.us wrote on 1/4/2013 1:54 PM: > It all depends on if your business is cash based (when payment actually received) or accrual based (when income is earned ie the work is done). ... > > Maybe other tax professionals can weigh in too. > > Phyllis Garratt > IRS Registered Tax Return Preparer > ...

You are supposed to claim it for the time in which it was actually paid. If this was all your income, you'd be better off claiming it in 2013 anyway. IRS gives you five years to make a profit. Better to have the income start the first of 2013 rather than November of 2012 and count towards that five years. best regards, Dee ----- Original Message ----- From: "Molly" <mkcindc@yahoo.com> To: transitional-genealogists-forum@rootsweb.com Sent: Friday, January 4, 2013 1:40:46 PM Subject: [TGF] Tax question How do I include for tax purposes work I did in 2012 but received payment for in 2013? Does it count for 2012 or 2013? My business is currently a sole proprietorship, if that makes any difference. And since I only went live in November, I will most definitely be in the red for the year. Thanks for your help! KC Reid Deeper Roots www.finddeeperroots.com The Transitional Genealogists List was created to provide a supportive environment for genealogists to learn best practices as they transition to professional level work. Please respect the kind intentions of this list. ------------------------------- To unsubscribe from the list, please send an email to TRANSITIONAL-GENEALOGISTS-FORUM-request@rootsweb.com with the word 'unsubscribe' without the quotes in the subject and the body of the message

As Phyllis noted, it depends first on whether you use cash basis or accrual basis accounting. If the former, then your income is definitely 2013. If the latter, and the work was completed AND delivered in 2012, then it's 2012 income (balanced by an Accounts Receivable entry). As it happens I am a tax professional as well as genealogist, so feel free to email me privately if you have any non-public questions. I'll answer simple questions for no charge, and I offer a discount to APG members. Hope this answered your question! Dave Liesse Skingco Services, LLC On 1/4/2013 11:40, Molly wrote: > How do I include for tax purposes work I did in 2012 but received payment for in 2013? Does it count for 2012 or 2013? My business is currently a sole proprietorship, if that makes any difference. And since I only went live in November, I will most definitely be in the red for the year. Thanks for your help! > > KC Reid > Deeper Roots > www.finddeeperroots.com > > > The Transitional Genealogists List was created to provide a supportive environment for genealogists to learn best practices as they transition to professional level work. Please respect the kind intentions of this list. > ------------------------------- > To unsubscribe from the list, please send an email to TRANSITIONAL-GENEALOGISTS-FORUM-request@rootsweb.com with the word 'unsubscribe' without the quotes in the subject and the body of the message >