Do December earnings count as 2006 income or do they count as 2007 income since they will be paid out in January?
I believe (and don't quote me, I'm not an accountant) that earnings only count as soon as you RECIEVE the money. So since you recieved the check in January, you need to pay taxes on it accordingly.
Its up to you, really. If you do accrual based accounting, make an invoice for google at the end of decmember for the earnings; then its 2006. If you are cash based and just do an invoice for when you get the payment, then its 2007. I'm cash based, so its 2007 for me There is no right answer here. I'd say most people here use a cash basis of accounting.
You pay based on when you receive the income. So if you receive the income for December 2006 in January 2007 it will be apart of 2007's income not 2006, if you are still unsure you should talk to a CPA.
If you get payment in 2006 then it gets taxed in 2006 If you get payment in 2007 then it gets taxed in 2007. They get you either way
Exactly right. I'm on accrual so this revenue would be an account recievable for 2006 and go on the 2006 taxes.