Where does the money go?

darcie smith

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darcie smith
We’re doing a small amount of water damage restoration. We have a project that won’t close out until Jan 1 at the earliest, but the bulk of the time and labor will be spent in the current year. When I bill it does it count toward this year or last year or does it not matter?
 

Mikey P

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We’re doing a small amount of water damage restoration. We have a project that won’t close out until Jan 1 at the earliest, but the bulk of the time and labor will be spent in the current year. When I bill it does it count toward this year or last year or does it not matter?
It'll count towards the year you process the payment in, at least in Service Monster.
 
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darcie smith

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I was thinking more about where the sale would fall rather than receiving the payment. I know it counts as income in whatever year you get the check. I was thinking of whether I should include it when I say we made $$$ sales in 2022. I can choose to bill on the first segment date when the job was started and it will count toward 2022 or I can bill on the last segment date and it will count toward 2023. Am i making any sense? It may truly not matter.
 

Papa John

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Let's say a Corporation seals a 10 year contract for a set amount of revenue. Some will include the entire amount for the 10 years in the year the deal was signed but Not earned. The IRS likes and even may require this because they get there tax money up front. The Executives of the Corporation like this because it Bloats there sales and their compensation and bonuses are based on sales. So they win. This tactic also makes the Share price go up which everyone likes. however, this negatively effects the remaining years of the contracts. These are the years when insiders maybe selling and screwing the naive retail investors. In those year you will see chargebacks in there accounting.

If you are on Cash basis, Then the money goes when you get payment just as any money you spend on the business is written off immediately, Except for large items that need to be written off over time.
If you are on the accural method, you will need to take inventory of the Dollar value of all your chems in stock at the ending of year and deduct this from your expenses. ie. this decrease your current year write offs.
Keep it simple and go with Cash Method.
 

Papa John

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Darcie
We’re carpet cleaners
Ask your accountant
Some of us have past lives in other fields.

I'm sure you wouldn't say @FredC is just a carpet cleaner.
I studied to be a stockbroker and won the investment contest two years in a row in college. Then came the crash of '88, I think it was. And everything changes after that.
In High school, I was the accounting teacher's pet and tutored other students.

But Yeah-- speak to your accountant because the laws change every year.
 

Dolly Llama

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lta
 

Kenny Hayes

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Let's say a Corporation seals a 10 year contract for a set amount of revenue. Some will include the entire amount for the 10 years in the year the deal was signed but Not earned. The IRS likes and even may require this because they get there tax money up front. The Executives of the Corporation like this because it Bloats there sales and their compensation and bonuses are based on sales. So they win. This tactic also makes the Share price go up which everyone likes. however, this negatively effects the remaining years of the contracts. These are the years when insiders maybe selling and screwing the naive retail investors. In those year you will see chargebacks in there accounting.

If you are on Cash basis, Then the money goes when you get payment just as any money you spend on the business is written off immediately, Except for large items that need to be written off over time.
If you are on the accural method, you will need to take inventory of the Dollar value of all your chems in stock at the ending of year and deduct this from your expenses. ie. this decrease your current year write offs.
Keep it simple and go with Cash Method.
My church accounts use accrual and cash accounting bothbecause of investments that are given or donated to them for future use. But, for the small amount even if it seems large, why complicate it.
 

darcie smith

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My question became irrelevant because the job got a lot bigger after day 1. The plumber didn’t have the leak stopped correctly and it went from a couple rooms to about double the area and it’s going to be more days in 2023 than in 2022. 2022 turned out well enough without it.
 

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