Do you charge hst when accepting deposits

Generally, sales tax is not charged on an initial deposit or pre-payment. Sales  tax is, however, charged on subsequent Draws.

I must be doing something wrong then.  I always create an estimate which includes the HST.  When the client puts a 25% deposit down, I create an invoice and it gets deducted from the estimate but an invoice always calculates the HST so I'll have to cancel the HST on the invoices.  Or is there another way of recording a deposit against an estimate?

Hi Kristine - We receive upfront deposits before invoicing.  I have to record the deposit so I open an invoice against the estimate for the amount of the deposit only.  I think what I'll have to do is create an invoice for the total of the estimate, then record the deposit against the invoice.  It looks like I have no need to create estimates. 

Thank you for your input.

My problem:  We sell rental space and take deposits (sometimes many) before the actual rental date.  Rental charges are subject to HST which is not payable until the final payment.  I do not wish to pay for the tax in advance, as it is not due until the rental date.  What would be the best way to set this up?  I have tried to work through estimates AND through jobs.  In each instance, I create the estimate for the entire job, create an invoice each time and post the deposit to the charge and not the HST.  The FINAL payment clears the balance of the charge plus the HST.  Reporting is a problem as the invoice is not clear for the client AND it is impossible to access the accounts receivable balance owing.  HELP please.

In your situation, Estimates don't appear to be practical.

This is what I would do:

First, add a Note to the Customer Profile indicating the Total Rental amount + Taxes.  Notes are displayed in the Customer Information screen.

Next, use the Receive Payment function to receive the Deposit (there can be only 1 deposit) and Pre-payments. Received from: the Customer, From Account: Accounts Receivable. This will create a credit (or multiple credits in the Customer Account. The Payments (Credits) are also displayed in the Customer Info screen.

When the Credits are equal to the $ amount calculated in the Notes, create the Customer Invoice for the full amount. Apply the Credits to clear the balance.

My customer's require an invoice to pay a deposit but they do not want to pay the sales tax or better put aren't required to pay the sales tax until the final payment is due.  How would I do this in QB?  Thanks!

So when you apply the deposit do you apply it including taxes? Do you apply it the amount excluding taxes so the total is the amount received in upfront deposit? Or do you apply the deposit with no taxes at all. As the invoices always are excluding or including taxes I am not sure how to apply it and I have a extra balance on upfront deposit when it shouldn’t be thanks

Hi SWSCYNDE

From the customer if you create a new Invoice, simply create a deposit line with 'out of scope' chosen for the tax indicator.  The GST should appear to be 0 on that invoice at that point.

Hi gsb06. Knowing the right tax code to use is essential when it comes to recording your transactions. Here's an article which shows you the types of tax codes included in QuickBooks: Common sales tax codes. I'd also recommend reaching out to your accountant for expert advice on which tax code works best for your scenario. If you're not in contact with one, I encourage you to search for one on our website using this link here. I'll leave this question here so other accounting professional members can chime in. Let me know if you have other questions. I'm here to help.

Thank you so very much for sharing! In stlll working on it and I feel the same when I talk to reps it is long time and I never get anywhere. So for your deposit you didn’t charge HST and for the invoice you did charge HST just the invoice but the deposit was stlll out of scope? Because that was my issue I used to include HST on the deposit and when we applied it I applied the same amount including HST now that I had to change to deposit not including taxes my HST is so high and it doesn’t match my balance sheet HST

Thank you so much for your help. 

I have question regarding deposits on the invoice, my invoice template shows a row "Tax" 0.00, but I would like to remove it, does any one here knows how to do it?

Hi alonsoowd,

Thanks for joining us here.   QuickBooks will add a line for sales tax with a zero amount, when sales tax is turned on.  However, I feel you would benefit more by contacting our QuickBooks Desktop specialists at at 1-855-253-1536 from Monday to Friday between the hours of 9 AM and 8 PM EST.

They'll be able to work with you on a more personal level, and look into this in more depth from their end.

If you have any other questions, feel free to reach back out. We would be happy to help!