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Level 1

Business filing

I did not do much with my business last year until November/December.  I billed out $1000.00 for engineering consulting work in December, but didn't get paid until January.  Does this go on 2019 or 2020 taxes?  Thanks

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Employee Tax Expert

Business filing

Probably on 2020 taxes. 

 

Most small businesses elect the cash basis of accounting and TurboTax will presume that you are using cash basis accounting. 

 

Under cash basis accounting, you would not recognize the $1,000 of income until it is received in January of 2020.

 

See this help.

 

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3 Replies
Employee Tax Expert

Business filing

Probably on 2020 taxes. 

 

Most small businesses elect the cash basis of accounting and TurboTax will presume that you are using cash basis accounting. 

 

Under cash basis accounting, you would not recognize the $1,000 of income until it is received in January of 2020.

 

See this help.

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

Level 15

Business filing

It depends on the accounting method used by the business. Most businesses use the cash accounting method.

If you use the cash accounting method then business income is reported in the tax year it is received.

If you use the accrual accounting method then business income is reported in the tax year it is billed.

 

Level 1

Business filing

Thanks, I do use the cash method.  

 

I didn't do much with my business until November and December.  Since I don't show any business income, do I still file business taxes for 2019.  I did have travel expenses and cell phone expenses?

My work was engineering consulting for a company and billed out $1000.00

 

Thanks again

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