How do I get back an HST payment from a cancelled invoice from a previous Quarter?

Hi Ptonjalken,

It's good that your business issues invoices ahead of time. I can see how important it is for you to account for this current quarter while adhering to the rules set by the Canada Revenue Agency. QuickBooks is a powerful program that makes it easy to put your financials into focus using our advanced features. 

Based on what you've described, it's important you're able to record your transactions the right way. I encourage you to reach out to an accounting professional for advice on how to best handle this situation. Doing this helps ensure your books are accurate. You can reach out to a QuickBooks certified accounting professional on our site using this link here. I'll also leave this question open in the Community so other members can chime in and share their advice. In the meantime, check out this helpful article with more info on how to: Create and apply credit memos or delayed credits in QuickBooks Online.

Feel free to ask questions below, I'm here to help.  

Thank you this sounds easy enough

We do require deposits ahead of time, but I also like sending the invoice out ahead of time to allow people to pay by credit card on their own (and to remind them, I find quickbooks emails do not get junkmailed as easily as a regular email which is a huge plus to me). You mentioned an easier way to account for deposits? Would it still allow for credit card payments? Thanks for any insight here as well :)

Hi Ptonjalken,

I can see how being able to record deposits quickly would be handy to speed up your process. QuickBooks Online has a deposit feature for invoices that just needs to be turned on. You can go with what LeithG has suggested, or I can help you enable the deposit option on your invoices with a few simple steps.

To add the deposit box on your invoices:

1. Click the Gear Icon on the upper righthand corner.
2. Choose Account and Settings from the left column.
3. From the choices on the left choose Sales
4. Scroll down to the section that says Sales Form Content, click the Pencil Icon, or Edit
5. You'll see Deposit, switch the toggle to On.
6. Hit the Save button
7. Finish by clicking Done

Once you've completed this you'll see a box on the bottom of your invoices that says deposit. You can input the deposit amount in the box and QuickBooks will create the entry into the liability account.

Depending on your QuickBooks Online subscription you may want to look at Creating Delayed Charge Invoices in QuickBooks; or Progress invoicing as invoicing options. These articles go into detail on how to use this type of invoice.

If you have any questions I'd be happy to help. Take Care.

Thank you this is the best answer i've gotten so far for any of my questions. Appreciate it.

Hi I just had one more question:

After they've paid the deposit, and then the work is done and I've reconciled their final invoice: What do I do with the deposit within my other liabilities account I made for this? Just delete it?

Thanks

Hi Ptonjalken

The Delayed Credit also goes against the liability for the prepayment, so when you include it on the invoice it zeroes out the liability, and records it all as revenue at that point.

Great, so let me see if I have this correct:

1) Set up a deposit account under Current Liabilities called Deposits

2) Send customers an invoice with just the Deposit item, no HST, and have it linked to the account above

3) Also set up a Delayed Credit Memo of the same amount for that customer.

4) When service occurs send them the true invoice, dated properly, and then apply the delayed credit to the invoice and have them pay the remainder.

When I do it the first time I am sure it'll make it a little clearer; but when I apply the credit to the invoice how do I also zero out the deposit from in the liability account? (I am just confused on how the Delayed Credit and the Deposit in the Liability account are connected)

Again I really appreciate the clarity!

(once I played around with Delayed Credit I see why it works that way, as you have to select the same item (Item being Deposit) and I am guessing it just applies it against the liability account itself)

Thanks again - let me know if I got anything else wrong :P

Hi Ptonjalken,

It's good to hear back from you. I'm glad you found the advice helpful.

Here's the clarification for Creating a Liability account and Product for Deposits you requested:

1) You set up a deposit account under Current Liabilities called Deposits, creating the Deposit Liability account is the first step.

2) If you haven't created the product item Deposit, this would be the next step.

3) Then you'd create and send the customer an invoice with just the Deposit item, no HST, and have it linked to the account above as you've mentioned.

4) Yes, you'll set up a Delayed Credit or Credit Memo of the same amount for that customer. 

5) You're correct, when service occurs you send them the true invoice, dated properly, and apply the delayed credit to the invoice and have them pay the remainder.

>When you create this invoice it lists the products/services you've provided. On the last line you'll include your Product Item-Deposit in the product/service field. You'll enter the Deposit amount as a negative to subtract it from the invoice. The deposit amount can't be greater than the invoice total. An invoice can have a zero total, but not a negative one.

>This decreases the liability account and applies the credit to your customer's invoice. It'll then recognize the income.

If you'd like more detail check out the articles I've shared above. They also explain the difference between delayed credit and credit memos and how to track the deposit amounts by customer. You should have all the information you need to accept deposits from your customers.

Thanks for reaching out with your questions. I'm here to help. I hope you're having a fabulous day!