SESKStuff Everyone Should Know
SESK: Stuff Everyone Should Know · sesk.info/biz-cash-accounting-method

Under cash accounting, when is income generally reported?

In the tax year the business receives it.

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  1. When an estimate is written
  2. When the money is received ✔
  3. When a customer first visits

Why: The cash method generally recognizes income on receipt and expenses when paid. It focuses on cash movement rather than when amounts are earned or incurred.

Huh, didn't know that: The business chooses its accounting method when filing its first income tax return.

The dad joke
Why did cash accounting check the mailbox? It reports what arrives.
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References

Answer: When the money is received. The cash method generally recognizes income on receipt and expenses when paid. It focuses on cash movement rather than when amounts are earned or incurred.

  1. IRS Publication 583, Starting a Business and Keeping Records www.irs.gov/publications/p583
    Under the cash method, you report income in the tax year you receive it.
    Checked 2026-10-11.

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