Do you use payment apps for your business? Or are you thinking about it?
They come with unique quirks to be aware of when it comes to your bookkeeping.
First, as usual, it is wise to have a separate payment app business account. This also goes for a separate bank account, it saves time when categorizing transactions. You can also use that business account to record owner draws. It's also worth noting that starting this year, payment apps will have to start filing Form 1099-Ks with the IRS if business transactions total $600 or more for the year. In prior years, app providers only had to file with the IRS if an individual account had at least 200 business transactions in a year and if the transactions combined resulted in gross payments of at least $20,000. From the IRS: "What should I do with this information?
It is important that your business books and records reflect your business income, including any amounts that may be reported on Form 1099-K. You must report on your income tax return all income you receive. In most cases, your business income will be in the form of cash, checks, and debit/credit card payments. Business income is generally referred to as gross receipts on income tax returns. Therefore, you should consider the amounts shown on Form 1099-K, along with all other amounts received, when calculating gross receipts for your income tax return."
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