Unpaid invoices?

[john1]

Hey guys, What do you do at the end of the business year when you have invoice that are paid partially and you can't get ahold of the customer?

I have a simple $150 job i did for a lady back in May and i call her every week and never get any answer. Leave voice mails, Tried to send a email and her email comes up non-existing all a sudden. Shes located about 20 miles away and my next step would be to drop by i guess.

She only owes $75 but still.

A business friend told me i can make a expense account in my quickbooks called "Lost Debt" i think it was and just write the difference off.

Thoughts?

 

[edgette]

You even out the loss against your accounts receivable with a debit under bad debt.

 

[HulkSmash]

75 bucks.. i wish...


but yes, you write it off as a loss.

 

[wildside]

turn it over to your collection agent......

 

[john1]

Funny, I just tried calling again and they answered.

Sent over the proofs again and hopefully can get this completed. $75 isn't much but is still money. Sent the proofs this time with Signvox so i will be able to tell when and how many times they view the proofs

So if i have a invoice that is completed but there is let's say $150 owed on it that is unpaid i just write off the $150? Do you need to invoice it into quick books as $150 then write off $150 or just the expense?

 

[wildside]

yes you post it in qb as a invoice and then post a debit as a bad debt for the same amount and they cancel each other out basically

i still say send it to collections, then there is no "bad debt" only "collected debt"

 

[ddarlak]

but yes, you write it off as a loss.

no...

you cannot "write off" uncollected money.

you can write off the material used, you can write off the money spent trying to collect, but please explain to me where the IRS lets you write off uncollected money.

I guess if you are not a cash based business and you pay taxes on your invoices as soon as they are printed, you could write off any uncollected part of it, but you or anyone else on the forum do not do their books that way - or at least shouldn't be.

 

[AzGene]

Last I checked you can deduct bad debts as a business expense as long as a good faith effort was made to collect that money.

 

[TheSnowman]

Yea, I had a 5K one that I got stuck with and my accountant did something with it. I don't know what that was, but it wasn't just "sorry pal"...there was at least some tax benefit to it...would have rather had the cash though.

 

[threeputt]

Yea, I had a 5K one that I got stuck with and my accountant did something with it. I don't know what that was, but it wasn't just "sorry pal"...there was at least some tax benefit to it...would have rather had the cash though.

Hmmmm....are you sure?

 

[ddarlak]

Last I checked you can deduct bad debts as a business expense as long as a good faith effort was made to collect that money.

checked where???

you simply cannot write off whatever you want because you fell wronged for not getting paid.

what would stop businesses from wink-wink-nudge-nudge, let me invoice you for 10 times the amount and you only pay one tenth of the invoice, i'll never come for the rest of it, but i can deduct it from my taxes?????

sorry. but you cannot deduct money you never collected. It is not the IRS's fault you didn't collect, so they are not giving you a deduction...

 

[TheSnowman]

Hmmmm....are you sure?

Let me check...yep, I'm sure. I'm by no means an accountant, but he asked me what the 5K that was still out was doing, and I told him, and he said we could do something with it to help. I'm not saying I got $5,000 saved on my taxes people...I'm just saying, there's a LITTLE help somehow with the tax issue.

 

[2B]

Yea, I had a 5K one that I got stuck with and my accountant did something with it. I don't know what that was, but it wasn't just "sorry pal"...there was at least some tax benefit to it...would have rather had the cash though.

+1

our accountant does something along the same lines

 

[john1]

yes you post it in qb as a invoice and then post a debit as a bad debt for the same amount and they cancel each other out basically

i still say send it to collections, then there is no "bad debt" only "collected debt"

So is this correct? Thanks all

 

[AzGene]

Here is a link to the IRS website....................
http://www.irs.gov/taxtopics/tc453.html

 

[visual800]

At the end of the year I turn in all unpaid inpaid invoices and my cpa does something with it. i dont know what and I dont ask.

 

[Gino]

If you're on a 'Cash' basis, then you can write the materials off only. You are not declaring anything until you actually get paid, therefore, other than the material, you can't write a job off.

If you're on an 'Accrual' basis, it's a different story. I'm not sure on that one.

Go cash and it's much more simple for bookkeeping.

 

[Kentucky Wraps]

My wife washed a $400 ish check and destroyed it. The guy (another sign shop I did a large print for) won't get back with me after I asked him many times to re-write it and I'd even pay a stop payment fee if he wanted. I don't think he's legally obligated to write another check...but at the same time...I have an unpaid invoice and he has a check that never got cashed. Any thoughts?

 

[Gino]

Besides telling your wife to go through your pockets before depositing your pants in the washer..... then her telling you to be more careful so as not to make more work for her.......

I'd send him a formal letter with a returned receipt explaining what happened and if you don't receive a check for the full amount within, let's say three working days, you'll be forced to turn him over for collection. He will be liable for all costs incurred for doing so in addition to the original bill. Those costs can be as much as $150 or more in some places. Attach the claim to his business...... and he personally.

Once he's served, he has 30 more days to comply. After that, then you can put a lien on him and his business. It costs more to do this, but he will almost have to pay up in order to go further in his own business.

Don't worry about p!ssing him off, cause he's set this in motion. You don't need scum like this for customers.