USA Prebilled income vs. advanced income (tax treatment)

Aug 11, 2017
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United States
Hello. We have a client that we bill 1-2 months in advance for professional employment services. I've been recording these invoices as advances on the balance sheet and expensing as we ear the revenue, regardless of whether or not we've actually collected monies. Our CPA advised us that these advances will be treated as taxable income, which we do not want. I am wondering if it would be more accurate to record them as pre-billed income and make an adjusting entry to advances when we actually receive the monies. And would pre-bills be treated as taxable income for an LLC reporting on cash basis. Any help would be very much appreciated.


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