Great question. Deposits are a great way to build strong relationships with your customers - they definitely appreciate your flexibility. We recently wrote a community article with a section about deposits (about halfway down). We plan on releasing a longer piece specifically about deposits soon, but the instructions in both articles are the same. Thank you @vpcontroller for the inspiration for that one (feel free to share your video ).
Let me know if you still need a hand after reading the article, @bluelake!
Since you do custom work, is the deposit refundable or non-refundable? Most custom shops around here it is non-refunable.
A non-refundable deposit is income when received, cash or accrual. And there is the issue of sales tax since that non-refundalbe deposit is income during the sales tax liability period.
If the recept of the non refundable deposit and completion of the work is in the same fiscal year that is not a large problem, but if completion of the work goes over the fiscal year end there is an issue.
For a refundable deposit the explation in link provided works, I would add that an invoice is not required, sales receipts work the best if the customer is a walk in or phones in a credit card charge.