New business owner here.
I started a LLC in CA in 2018 which costs $800 per year.
I did not file my 2018 return yet (extension)
I performed work in 2018 for a client for $750. Did not receive the money until 2019.
I have not decided if I am going to use cash or accrual method accounting for the business.
I had to wind down the business in 2018. I did not pay the $800 fee to CA to renew the business for 2019.
I have 2 options as I see it, but dont know which is right?
File 2018 return Schedule C for business as ACCRUAL method accounting, take into account the revenue 750.
In 2019, I will receive a 1099 for the money. Recognize the 1099 on the 2019 return and then note that the money was taxed in 2018 (and effectively zero out the income for 2019)??
File 2018 return Schedule C for business as CASH method accounting, 0 revenue for 2018.
In 2019, I will receive a 1099 for the money. Recognize the 1099 on the 2019 return.
Are there pro’s and con’s to either of these? option B seems like a cleaner method to follow, and it does put me at a slight disadvantage economically as I will be in a higher tax bracket in 2019."
A few comments: