Stupid Tax Question...

[Lee]

Okay stupid question about taxes.

Lets say that i 'sold' $1000 worth of product in 2008 but the money didnt actually arrive until this week for those sales, am i supposed to be showing that as earnings for LAST year or THIS year?

Regards,

Lee

[DEVELISH]

here its actually when the revenue did take place, when the funds arrived. but how it works outside of my wicked country I do not know

[GayGeek]

I believe it depends on when you're using the accrual method of accounting or not. (I forget the name of other common method). Both are accepted from the IRS as valid forms of accounting.

In my case, unless I receive a 1099 to the contrary, I simply consider my income to be based in the year the money was deposited.

--Aaron

[nickbaer]

Accrual vs cash accounting.

There are advantages and disadvantages to both.

But I like cash.

[PUMPaul]

I use cash method and would not count it until this year.
My accountant suggested cash method because my business is so small. When I get to the point that the IRS requires quarterly tax payments then maybe the accrual method. It's really worth a few hundred bucks to have an accountant look over everything and figure what works best for your business.

[maxprohost]

Agreed, I would count it towards this year and not last year.