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New Member
posted Jan 18, 2024 4:05:38 PM

Income received in 2024, but work is performed in 2025 and expenses are incurred in 2025 - what year does the income need to be reported?

Our small business will collect payments from customers in 2024 for retreats we are hosting in early 2025. The payments collected in 2024 will be significant ($300k+) and our expenses associated with the retreats in 2025 will be significant ($200k+), so our actual net income from the retreats will only be $100k+. How do we ensure we do not pay taxes on the $300k in 2024 before we are able to count the associated expenses in 2025? 

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1 Replies
Level 15
Jan 18, 2024 4:23:08 PM

Most businesses are on a cash basis where income is reported in the year it was received and expenses in the year that they were paid.