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test32
Level 1

Need to move Customer Deposits to Income

Thanks.  I don't use deposits though.  I normally have the invoice open on QB online when the payments comes in I apply it to the invoice.  Hence, right now I have huge amounts under income that i need to move to deferred income.  How can I do that? and moving forward should I change my product item account to deferred income instead of income?

Calisteve
Level 2

Need to move Customer Deposits to Income


@AGMAIN wrote:

We are an S-Corp running on a cash basis. We get half down from our customers to get a job started and that money goes into a Customer Deposit that is a "other current liability".  When the total due on the bill is paid in full that money is then moved out of customer deposits and into income. The accountant is telling me the money in customer deposits is considered income for the year so I need to move it to income on Dec 31st. What is the best way to move it to income and then back into customer deposits so that when the remaining payment is made on an invoice my customer deposits account will still be accurate? 


Deposits are considered income if they are non-refundable. If they are refundable, it is not income but a liability until it's recognized.

JenPia
Level 1

Need to move Customer Deposits to Income

Hello, can you walk me through the invoice steps to record the non-refundable 50% deposit as income/sales when we receive payment and then again once we receive the final 50 % balance? We have been recording upfront customer deposits as a liability and offset this account on final invoice, but as above, we also report cash basis for tax and our deposits are non-refundable. We want to show the upfront deposit as income. 

Kristine Mae
Moderator

Need to move Customer Deposits to Income

Let me share some information, JenPia.

 

Upfront deposits are liabilities. If you'll want to record it as income, you'll want to record the invoice payment directly. However, I suggest reaching out to your accountant on the best way to record the retainers.

 

I'll add the reference about managing upfront deposits to guide you better: Manage upfront deposits or retainers.

 

Feel free to reach out to us if you have other concerns. We're one comment away. Take care!

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