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 Post subject: can a business-savvy person answer a quick question? (taxes)
PostPosted: Wed Mar 26, 2014 9:44 pm 
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ok, so i am clueless, and we don't have the money to hire a professional. after all, our "business" technically lost money. (since we didn't make anything, and the computer depreciated)

so, we registered a business 2 years ago, and bought a laptop for it. (we used a credit card, but one in our own names, so we just recorded it in the business tax return as if we just provided the money ourselves as capital instead of calling it a liability, since it's really all the same, and we could just say that we're paying down our personal debts after having paid off the laptop's debt first.)

so, our assets aren't equaling liability+capital.

we have 0 for liability, as indicated above, but for some reason, our capital is recorded as negative. (i suppose because of last year's depreciation? my husband is using the H&R block business program, and it took last year's number. i guess last year's return was incorrect as well. oops! i bet he started it with our capital being 0.)

so should our capital accounts be positive? (it should equal the assets, right?) and any depreciation we just eat, right?

so basically when we buy something for the business with our own money, we record it as positive capital and positive assets?

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 Post subject: Re: can a business-savvy person answer a quick question? (ta
PostPosted: Wed Mar 26, 2014 10:20 pm 
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I wish I could find my notebook from when I took basic accounting a couple years ago.

So from the top. You're right, assets = liability + shareholder's equity. So you bought the laptop, let's say for $1000. So +$1000 in assets, +$1000 in SE. When you record depreciation, you have to subtract from both sides of the equation. So -$100 in assets, -$100 in SE. If your books weren't balanced last year (say 1000 assets = 0 liabilities + 0 SE), you should correct your books so that they're balanced. So in this example, your final balances should be $900 assets = 0 liabilities + $900 SE.

You eat the cost of depreciation, but the important part is that both sides of the equation are equal. I'm fairly surprised that the business program let you file without throwing up some warnings about an unbalanced statement.


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 Post subject: Re: can a business-savvy person answer a quick question? (ta
PostPosted: Wed Mar 26, 2014 11:00 pm 
Invented Vegan Meringue
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Joined: Wed Oct 20, 2010 2:46 pm
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i think it's because we printed it out (and we must have disregarded the cover sheet that most likely gave us a warning about them not being equal, cause that's what happened this year.) and just mailed it in. nobody ever contacted us, so i guess they didn't care.

this year i figured i should look into it.

(there is a second cover page under the warnings called "override and estimate report" that tells us nothing. it says {on sheet 3 you entered a value of ""} but we entered nothing in lots of places.)

thanks for your help. it makes more sense to me now. i'll just change our capital value to the value of the depreciated computer.

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I solved it for once and for all -- and for everyone -- by intentionally leaving behind some 9-lives burritos... ~Lorelei4mc
supercarrot.com, vegan groupony things, vegan coupons


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