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Level 1

How to apply a customer deposit without sales tax code to invoice?

I'm receiving deposits from customers, I do not charge GST on these deposits and I don't know the final invoice amount until the end. For example I have a customer who paid $500 deposit. I enter this deposit as a sales receipt and deposit it in a liability account "customer deposits". The final invoice is $2000 plus gst = $2100.  

 

When making the invoice, I enter the $2000 to an income account. Then I minus the customer deposit paid (-$500).  However, when I do this, quickbooks only calculates the GST on the $1500 instead of the full amount ($2000).  I tried the leave the sales tax code field empty for the "minus customer deposit amount", but quickbooks wants me to apply a sales tax code. 

 

Would it be correct to use the GST "Exempt" code for deposits?

Solved
Best answer May 22, 2020

Best Answers
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QuickBooks Team

How to apply a customer deposit without sales tax code to invoice?

Thanks for following up. I can see how Step 5, Option A of the Manage upfront deposits or retainers article isn't quite as clear as it could be. Since the amount is reducing the amount of the invoice, yes, you'd want to put it as a negative line item. The negative goes in front of the quantity amount to reduce it.

 

The other important step for things to balance the way you'd like them is to make sure you're putting a zero-rated tax code on your negative line item. For instance, here's test invoice I threw together to show you how it'll look. You'll note that the HST sales tax is calculating on the full $1000 amount I've entered, not just $500.

 

 

I want to make sure the steps are clear and that you're choosing the best option for recording the deposit for your needs. If you still need guidance, I encourage you to touch base with QuickBooks Desktop support outside of the community. Speaking with an agent one-on-one will make certain that we're on the same page.

 

Check out the Intuit QuickBooks Desktop software support policies article to learn how to reach us. Please note that due to staff reductions in response to the current globla situation, support hours for all Desktop products are currently Monday to Friday between 9 a.m. and 8 p.m. ET.

 

Have a great weekend.

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4 Comments
Highlighted
QuickBooks Team

How to apply a customer deposit without sales tax code to invoice?

Hello again LH10,

 

I know deposits can be a bit tricky to figure out, especially when you need the recorded and calculating a certain way. QuickBooks Desktop is here to help.There are a couple of methods to consider for recording a customer deposit, so I'll give you both so you can choose the one that makes the most sense for you.

 

To start, we have a help article in the QuickBooks Community called Manage upfront deposits or retainers. It has multiple parts, but outlines the steps in an easy-to-follow fashion so that you can record your customer deposit.

 

The other method is one you can find in the in-product QuickBooks Desktop Help section. Here's how to pull it up in the program.

  1. Press F1 on your keyboard as a shortcut to bring up the QuickBooks Desktop Help section.
  2. Select the Help tab.
  3. Click Search.
  4. Search for Handling upfront deposits and retainers.

I encourage you to read through them both to decide which you'd like to go with. Following these steps, you should be able to record the amounts with the sales tax as needed.

 

Give it a shot and let me know how it goes. Take care!

Highlighted
Level 1

How to apply a customer deposit without sales tax code to invoice?

Thank you so much for the quick reply! 

 

I was not able to find anything about it in the Quickbooks help section following your steps. I did find the article named: "Handle down payments and overpayments". However this method would not work well for my company. 

 

I did read the article on Quickbooks community, I'm pretty much handling the deposits the way it is explained. In the article on quickbooks community I think I want to use step 5, option A to apply the deposit to invoice. However it doesn't specify in the article that this customer deposit item line on invoice should be negative number? Or am I misunderstanding the article? 

 

If I understand it correctly, I'm wondering if it is  correct to assign the "Exempt" sales tax code to the item customer deposits? Otherwise sales tax will only be calculated on the balance. 

 

What I would like to see on the invoice is:

Total fee = 2000

Less deposit paid = -500

GST: $100

Total invoice/balance: $1600

Highlighted
QuickBooks Team

How to apply a customer deposit without sales tax code to invoice?

Thanks for following up. I can see how Step 5, Option A of the Manage upfront deposits or retainers article isn't quite as clear as it could be. Since the amount is reducing the amount of the invoice, yes, you'd want to put it as a negative line item. The negative goes in front of the quantity amount to reduce it.

 

The other important step for things to balance the way you'd like them is to make sure you're putting a zero-rated tax code on your negative line item. For instance, here's test invoice I threw together to show you how it'll look. You'll note that the HST sales tax is calculating on the full $1000 amount I've entered, not just $500.

 

 

I want to make sure the steps are clear and that you're choosing the best option for recording the deposit for your needs. If you still need guidance, I encourage you to touch base with QuickBooks Desktop support outside of the community. Speaking with an agent one-on-one will make certain that we're on the same page.

 

Check out the Intuit QuickBooks Desktop software support policies article to learn how to reach us. Please note that due to staff reductions in response to the current globla situation, support hours for all Desktop products are currently Monday to Friday between 9 a.m. and 8 p.m. ET.

 

Have a great weekend.

View solution in original post

Highlighted
Level 1

How to apply a customer deposit without sales tax code to invoice?

Thank you again, I will set up the way your example is.