There are actually two different forms of accounting. You are describing accrual accounting. You book revenues and expenses when they are incurred Generally, that would coincide with when the work was performed. The alternative is often called cash accounting. You record expenses when you spend the money, and you record revenue when you are actually paid.
Suppose you do mystery shopping in September 2018, earning $2000 in fees, and spending $300 in reimbursable expenses. You are not paid or reimbursed by the MSC until the following February 1, 2019. In accrual accounting, you would owe tax on $2000 for the fiscal year including September, so on January 15, 2019 (when estimated taxes are due), you might have to send the IRS 25% (or whatever your marginal rate is) of $2000 = $500 before the MSC even pays you on February 1, 2019. With cash accounting, if this was all you work you did as an independent contractor in 2018, you would have a loss of $300 for Tax Year 2018, and revenue of $2300 for Tax Year 2019.
This is somewhat simplified, but the overall idea is, I believe correct. When you file your income tax for the first Tax Year in which your business was active you have to decide whether to use cash or accrual accounting. This is indicated on Schedule C. Without the permission of the IRS, you can not change the method for future years.
@alannajm wrote:
I think you would not be taxed according to what months you were paid but according to what months you actually worked.
Shopping Southeast Pennsylvania, Delaware above the canal, and South Jersey since 2008