Income Question

[owoody]

Im self employed as a contractor and send out invoices for my service on the 20th of each month,but sometimes don`t get paid until the following month..Do I count the income when invoiced or received?My P&L statement will showed the month billed and my bank statements will show the month deposited............

[Dj1995]

Do you use the cash or accural accounting method when you file your taxes?

[owoody]

We use the cash basis.............

[Dj1995]

Cash basis tax payers include income when it is received, and claim deductions when expenses are paid. Check with your attorney or accountant, but if you are using a cash basis, then your P&L's should reflect the income when you receive it.

[oregonpilot]

Cash basis tax payers include income when it is received, and claim deductions when expenses are paid. Check with your attorney or accountant, but if you are using a cash basis, then your P&L's should reflect the income when you receive it.

I am self employed-cash basis. My trustee wanted to see WHEN i got checks from customers and what month i paid expenses on my P&L's. I had customers last name on my P&L's and then i cross referenced those names to the deposits in my checking. He was really happy to see that documentation and didn't question anything...at least in that subject.