We are a contractor and when we invoice the owner of the project always holds back 10% retention on every invoice until the entire job is completed. 

Here is what our invoices look like

Foundation   $10,000

Retention      -$1,000

Invoice Total   $9,000

When we receive the $9,000 payment the invoice shows paid $9,000

The Profit & Loss however shows that we were paid $10,000 but that isn't true. This is happening with every single invoice paid. Why does it do this? I don't see where the $1,000 is ever taken back out on the P&L.

This is a huge issue I am concerned we have been over reporting our income on our tax returns and being overcharged on income taxes.

Please help

We are Cash Basis and I have confirmed the P&L shows this on Cash Basis