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Level 2
posted Mar 9, 2025 6:24:54 PM

Please, help.. Unpaid invoice..

Hi Community Members,

I started my interior design business under my LLC, and this is my second year. Unfortunately, I have a client who hasn’t paid an invoice—it's not a huge amount, about $5,900. I’ve tried reaching out, but their business has shut down.

How should I handle this when filing my tax return? Also, I had a few projects lined up last year, but they were all postponed, making this my only source of income for the year.

Any advice would be greatly appreciated!

Thanks!

0 2 985
2 Replies
Level 15
Mar 9, 2025 6:36:03 PM

if you are on the cash basis of accounting, since you have never recognized this as income you are not entitled to any deduction. Most small businesses use the cash basis for income tax reporting. 

Expert Alumni
Mar 9, 2025 6:37:05 PM

You don't do anything with the $5,900 unpaid invoice for your tax return.  You didn't recognize it as income, so you can't write it off as a loss, unless you are on an accrual based accounting system and you reported it as income on last year's tax return (which I doubt you are).  It is just revenue that never happened, which isn't reportable.  It's unfortunate, but not a taxable event.