Is taxable income from Sole Proprietorship Business the amount billed or the amount received during the tax year.

Hello 

I started a Sole Proprietorship Business in the middle of 2021 with W2 income for the first quarter of 2021. I use QuickBooks to handle my books and when I run a Profit/Loss Report for 2021 it shows profit on funds that have not been collected yet or were collected in 2022. My billing is for contract time billed hourly as a IT Project Manager.

My question is do I pay Tax on what I billed in 2021 or the funds received in during 2021 only?

Thanks