Hi Daniel -- This is a common question. Often the motivation for billing in advance for a lengthy period of time is to improve the company's cash position early. This is typically a flawed plan because in reality the company has not "earned" the money until the services are rendered. This can open you up to liability should the customer choose to cancel or if the company should dissolve. Further, in accrual-basis accounting (rather than cash-basis), you are required to defer the income until it is earned. In this case, the "unearned" revenue sits on the liability side of the balance sheet. This can be quite complicated.