Customer Deposits

by Ana
(Miami)

What account should I use for deposits (received) in advance from clients?


I am using QuickBooks.

I need to know where I should deposit the payment in advance that I receive from my clients ... and how I can process the final payment to make my final invoice show "paid in full".

What accounts do I have to use?

Thanks.





Hi Ana,

When you receive a deposit in advance from your customers (also referred to as a customer prepayment), you have a few options. I'm going to give you a link on my site where I explain your options and how to book the entries.

How to Record and Apply a Customer Deposit or Prepayment


Option two is the better choice if you have a limited bookkeeping background. Just keep in mind, you will need to have your accountant make an adjusting entry each year-end when you use this method.

P.S. Ana, take the time to read right to the end ... to find out where you can view a video on how to do it.

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Jul 19, 2013
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starstarstarstarstar 		GST and Retainers
by: Leanne, Calgary AB

I have a client who is a photographer.

She takes a $700 retainer when the photography contract is signed. A second payment of 50% of the remaining balance 4 weeks prior to the wedding date. Then the balance plus all the GST upon delivery of the wedding photos.

Note: there could be over a year between the collection of the retainer and the final payment. Is this the correct method to invoice the GST?



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Hi Leanne,

In accordance with CRA, you do not charge tax on customer deposits. Customer deposits are unearned revenue and so no tax is due until you perform the work or deliver the product. For a reference to place on file, see CRA GST Memoranda G300-6-8 Deposits points 6&7.
Sep 30, 2016
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starstarstarstarstar 		Undeposited Funds Account in QB
by: Shelilia

How can I deposit the monies in the Undeposited Funds account to the Bank account? I'm using Enterprise Account Edition 2015. Thank You Kindly.
Sep 30, 2016
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starstarstarstarstar 		Shelilia
by: Lake

I've never used Enterprise however if it works the similar to QuickBooks Desktop, then all you need to do is go to the Banking menu and select Make Deposit

A list will pop up of the funds received but not deposited yet. Click on the appropriate one and hit enter. It will populate the deposit screen.

All you need to do now is review the deposit screen and save if you are happy.

If the bank deposit was made up of more than one customer receipt, then click on the customer receipts that make up the total amount of the bank deposit.

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