Barber Shop

[Oxtrainer]

How must a small barber shop, one person handle the receipt of cash.?
Must they have a cash register.?
Do tips have to be handled separately?
Is there any info on this type of small operation?
I have a client who just wants to report weekly inflo of cash? Of course I don't think
this will fly but what do you think? Any ideas.

[Jiggers]

Barber Shop

Taxpayer is not required to keep a formal set of books.

Any way that a taxpayer can arrive at gross income, expenses, etc. is acceptable to the IRS.

If the taxpayer wants to total his total receipts, including tips, weekly, that is fine.

I have one barber who keeps track of haircuts only. Multiplies that number by his fee and that is his gross receipts.

His expenses are limited to one check each for rent, utilities. Has few supplies, usually just once or twice a year.

Works for him and works for me.

[Black Bart]

Any which way you can.

How must a small barber shop, one person handle the receipt of cash?

That applies to both you and the barber. There is no "must." As long as IRS can follow a paper trail; then you're okay.

Must they have a cash register.?

No. He can write it in a spiral school notebook if he wants to. Like Jiggers said; no formal books required (obviously I'm talking about a schedule C and nothing more).

Do tips have to be handled separately?

No. It's all income to IRS, whether it's for clippin' or lippin'.

Is there any info on this type of small operation?

We're workin' on it right now. If they're younger people and are computer-savvy, they may want to do some computer-work themselves while older folks may prefer a "Dome" monthly book (Office Max). They can help you sometimes, but you can't rely too much on "do-it-yourself" posting (book or computer) -- some are fairly accurate; some are just awful.

I have a client who just wants to report weekly inflo of cash? Of course I don't think
this will fly but what do you think? Any ideas.

Weekly is okay if it totals up to at least what he put in the bank. Usually one of the first things an agent wants to see is last year's bank statements (plus December of the preceding year and January of the following) and the shop income should be at least that much after subtracting off loans, transfers from savings, gifts from your long-suffering relatives, and any other non-taxable tidbits that found their way into the account. And yeah, I think it will fly if he wants to do it that way and if you think it's pretty accurate. Keep the customer happy and you'll keep him.

Methods vary by accountant and by region and I know many people insist on putting their clients on computer or Quickbooks. That's fine if it works for them, but I've got several small shops who don't care anything about becoming bookkeepers and hate paperwork in general. They variously write things down daily, weekly, monthly, or even yearly. A few just throw every receipt, cash ticket, charge ticket, bank statement, and any/all papers that even faintly resemble "tax papers" into a cardboard box, bring it to me at the end of the year, and (assuming the business survived) pay me an arm and a leg to sort it all out (I'm digging into one now).

The point is; go with the flow. If whatever normal/crazy method they want to wallow with all year is, in your professional opinion (and hopefully that of an IRS auditor's), a generally accurate and plausible reflection of the net profit of their business -- then that should be good enough for you to defend if it comes to it.

Now; any nitpickers -- feel free to fire away.

P.S. Can't resist: I once had a client retailing beer at a lobby-sized little drive-through (no inside sales or sit-down drinking) and he kept everything (income/expense) on little index cards in a cigar box. He was audited -- IRS agent said (and I quote), "Why do I always get these cases?" The guy got a no-change.