Customer Deposits in QuickBooks

How do I record customer deposits on invoices or sales receipts? A deposit is not revenue (yet) and needs to be recorded as a liability until such time the sale is made and the deposit can be applied. QuickBooks makes it easy to accept and track customer deposits.

1) Create an “other current liability” account in your chart of accounts named “Customer deposits”.
2) Create a new “service” item in your item list named “customer deposits” , make sure it is marked “non taxable” and the “rate” is left at “0.00″. The account will be the newly created “customer deposits” account from step one.
3) When accepting a deposit you will use the deposit item on your invoice or sales receipt. The process is like any other sales transaction other than the fact the liability account is affected rather than an income account. Cash is debited and the liability account is credited.
4) When the sale for which you accepted the deposit is made you will include this deposit item on the first empty line below the items on the sales receipt/invoice as a NEGATIVE number. This will reduce the amount owed by the deposit amount. The transaction will debit the “Customer deposits” account and credit your income account.

You will probably want reporting on customer deposits and that is a very simple task as well. Go to your reports menu and select “custom reports” then “transaction detail report”. Make sure you select “all” from the date field and select the following columns; Type, date, Source name, Amount, and Balance. In the “Total by” field you will want to select “customer”. Go to the filters tab and select “Item” and in the drop down list select “Customer deposits”. Click “OK” and you will have your customer deposit report. I would recommend that you change the header to something like “Customer Deposits” and then memorize the report for future use.

Author: John

My name is John Cronkite and I operate Advanced QuickBooks Services. I am an Advanced certified QuickBooks ProAdvisor, QuickBooks ProAdvisor; Enterprise Solutions certified ProAdvisor and Point of sale certified Proadvisor. I am a member of the Intuit developer’s network and hold a B.S. degree in Managerial Accounting. . The official link to my certifications can be found on Intuit’s “Find a ProAdvisor” website.

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