Schedule L balance sheet for cash-basis company???

[awholenoobworld]

My s-corp elected cash-basis accounting. We need to file a balance sheet for the first time per the IRS, but as I understand it cash-basis balance sheets do not include long-term assets, depreciation, inventory, balances owed on loans, payroll tax liability, sales tax liabilities, etc etc etc. What DO I put on the schedule L for a cash-basis company? Like the bare minimum. We have long-term assets and outstanding loans used to pay for the assets. We also had balances due on credit cards used to pay for some of our expenses. Also, where is Turbotax getting the retained earnings calculation from, and how will this affect what I need to put on the balance sheet? Like, if I leave long-term assets off, won't I need to adjust Turbotax's number? It seems Turbotax is set up for accrual basis even though I chose cash-basis???

[awholenoobworld]

I don't entirely understand cash-basis balance sheets at all I guess. All the accounting books I've looked at to try to figure this out only give accrual examples for some reason. But if I put the amount in our checking account under "cash" in Assets, but don't put the amount owed on loans in liabilities, it looks like that money belongs to us instead of being borrowed money - is this really correct for cash-basis?

[Critter]

"cash-basis balance sheets do not include long-term assets, depreciation, inventory, balances owed on loans, payroll tax liability, sales tax liabilities, etc etc etc."    Who says so ?   They certainly can and do have those items.

[Critter]

I hope you are using the TT BUSINESS program because the Home & Business you are posting from will not/ can not complete an 1120S.

[awholenoobworld]

Or do I just remove the amount owed on loans from the "cash" amount, decreasing our bank account balance by that amount?

[Critter]

If your shareholders put "seed" money in the business then that was indeed a "loan from shareholder" which balances off the cash in hand.

[awholenoobworld]

Also: MOST of the money in the bank account at the end of the year is leftover loan money and money contributed by shareholders. We had a loss last year.

[SweetieJean]

As we said in  your other posts, you appear to need local professional assistance.

[Critter]

The LOANS  should not have been entered in as income in the books ... it was a loan from shareholders which increased the basis in the business.   If you don't know what you are doing you REALLY should seek professional assistance to get your books and returns in order ... the cost of a pro is small next to the possible penalties & interest the IRS can impose.

[Critter]

On top of it you have waited until the last minute to file the corporate return ... best you can do now is file what you have and amend later when you seek professional guidance.

[awholenoobworld]

These answers did not show up for me til now. I'm using TT Business. This is a very tiny mom n pop micro-business. I should have been clear, there are no shareholder loans. The loans are loans to the s-corp from a bank and don't count towards equity. Some of the money from those loans is what's in the bank account. I've gotten some "the balance sheet on the tax return isn't that important" advice from the accountant I consulted with, but I want to understand now that I see I do actually have to file one, how to make it match the accounting method on my return instead of what Quickbooks prints out. I'm also confused about where Turbotax is getting their automatically calculated "retained earnings" number from. If I subtract "adjustments to shareholder equity" it throws the balance off. Are distributions to shareholders entered in TT Business already being subtracted from the balance sheet somewhere? I can get it to balance without adding those, but I don't know if that's correct. And what I've ended up with a modified cash basis balance sheet, not a true cash basis one as I understand it, since I've listed long-term assets and debts owed to banks (?)

[awholenoobworld]

Well, I got it to balance with TT's automatically generated retained earnings if I do not put anything in the "adjustments to shareholder equity" line, so I'm just ASSUMING TT Business already subtracted that number from their retained earnings calculation, but I wish there was an easy way to see exactly where their calculations on various are coming from so I know if I have to make adjustments or not. The  "adjustments to shareholder equity" line is confusing.

[Critter]

You do know you can LOOK at the actual tax forms anytime you want to ?   Switch to the FORMS mode.

[awholenoobworld]

I use Forms mode a lot, but clicking on data source wasn't working for me for some reason. Restarting the program I now see that it flows from Schedule M-2, and it does have dividends and distributions subtracted already. That line on the TT balance sheet was throwing me off.

[Anonymous]

cash basis  is really a misnomer.    you buy a truck and finance it.    report on balance sheet full cost of truck and the loan   you take depreciation which is deductible on page 1 and the accumulated depreciation is reported on the balance sheet.       you pay an expense with a credit card.  the IRS says its deductible when the liability to pay the vendor became the credit card  company's responsibility.   result expense on page 1 credit card liability in balance sheet.  

maybe take a bookkeeping course at a community college. 

a basic understanding of accounting is necessary for businesses. so are tax rules.     for example, you buy "inventory" for sale to customers.   if you revenue is low enough the IRS you can expense it.      may rules and tax and accounting don't always agree.  if you use the cash basis to begin your business, it could grow large enough to require switching to accrual basis and you just can't just do it - certain tax forms must be filed.     

so maybe you want to try Quickbooks or other bookkeeping software.    however, I think you would be best served by a  tax pro or bookkeeping service.  the product that a bookkeeping service produces is not guaranteed to be in conformance with tax rules required for reporting