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Actually, it depends on several factors. The quick answer is you only count as income what you actually receive in 2004 regardless of what time frame it is for. BUT there can be exceptions depending on how your have your business set up. Many businesses work on an accrual basis rather than a cash basis. The accrual basis places income and expenses in the correct period they occurred. Cash basis is just that.. it becomes an income when you get the cash or an expense when you spend it.
As far as matching to a 1099... that will definitely keep the IRS happy. Just remember that the 1099 a company sends out will be based on the dates they issued the checks and not take into account the date you received it. For example, if someone wrote a check to you on December 30th, 2004, they would show up as 1099 applicable income for 2004. You likely won't receive the check until 2005 and by cash basis would normally count it as 2005 income. You can account for the variance by using the date of check issue to record it rather than the date of the period it's for.
The 1099 issue doesn't come into play if you are incorporated.
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