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oldnotdead
Level 2

Tenant security deposits

I received a check for a tenant security deposit and 1st month rent. How do I deposit this so that the tenant doesn't show a credit.

Thank you,

Solved
Best answer January 23, 2019

Best Answers
KhimG
QuickBooks Team

Tenant security deposits

Thanks for visiting the Community, @oldnotdead.


I’m here to walk you through the steps in recording the security deposit and 1st-month rent you received from your tenant.


First, let’s create an item for the security deposit and 1st-month rent, then link them to a Liability account. Here’s how:
1.    Go to List from the top menu and select Item List.
2.    On the Item List window, click Item, then New.
3.    Select Service on the Type drop-down.
4.    Enter the Item name and fill in other necessary fields.
5.    On the Account drop-down, select a Liability account.
6.    Hit OK to save the item.
7.    Follow the same steps to create an item for 1st-month rent.

 

 

 


Check out this article for more information: Add, Edit, and Delete items.


Once done creating the items, record the payment by using a sales receipt. Here’s how:
1.    Go to Customers menu and select Enter Sales Receipts.
2.    Select the tenant on the Customer: Job drop-down. 
3.    Fill in the relevant information at the top of the form like the Date and Sale No.
4.    On the first and second line item, choose the security deposit and the 1st-month rent items respectively.
5.    Enter the amounts on each item.
6.    Hit Save & Close.

 

 


You may take a look at this article for reference: Create sales receipts.


That should answer your question for today. Please let me know if you need anything else, I’m always here to help. Take care and have a great day!
 

View solution in original post

23 Comments 23
oldnotdead
Level 2

Tenant security deposits

I need to add that I have the Tenant set up as a job and the security deposits as "security deposits held by other", other current asset.

KhimG
QuickBooks Team

Tenant security deposits

Thanks for visiting the Community, @oldnotdead.


I’m here to walk you through the steps in recording the security deposit and 1st-month rent you received from your tenant.


First, let’s create an item for the security deposit and 1st-month rent, then link them to a Liability account. Here’s how:
1.    Go to List from the top menu and select Item List.
2.    On the Item List window, click Item, then New.
3.    Select Service on the Type drop-down.
4.    Enter the Item name and fill in other necessary fields.
5.    On the Account drop-down, select a Liability account.
6.    Hit OK to save the item.
7.    Follow the same steps to create an item for 1st-month rent.

 

 

 


Check out this article for more information: Add, Edit, and Delete items.


Once done creating the items, record the payment by using a sales receipt. Here’s how:
1.    Go to Customers menu and select Enter Sales Receipts.
2.    Select the tenant on the Customer: Job drop-down. 
3.    Fill in the relevant information at the top of the form like the Date and Sale No.
4.    On the first and second line item, choose the security deposit and the 1st-month rent items respectively.
5.    Enter the amounts on each item.
6.    Hit Save & Close.

 

 


You may take a look at this article for reference: Create sales receipts.


That should answer your question for today. Please let me know if you need anything else, I’m always here to help. Take care and have a great day!
 

oldnotdead
Level 2

Tenant security deposits

Thank you for the information. It is very useful. 

Thanks again,

KhimG
QuickBooks Team

Tenant security deposits

You're welcome, @oldnotdead.

 

If you need anything else or further assistance working with QuickBooks, don't hesitate to let me know. I'm always here to help. Take care and have a great day!

posh
Level 1

Tenant security deposits

We followed your instructions on recording security deposits.  But now how do we record a refund of the security deposit.  We are a new community member following your instructions.

Angelyn_T
QuickBooks Team

Tenant security deposits

Hi there, @posh.

 

Thank you for joining the thread. Allow me to help share information on how to create a refund for security deposit in QuickBooks Desktop (QBDT).

 

If you've use a liability account for the security deposit, you can write a check for the amount to refund.

 

To create a check:

  1. Go to Banking at the top menu bar.
  2. Select Write Checks.
  3. Fill in the necessary information.
  4. Select the liability account you use for security deposits.
  5. Select Save and close.

That should allow you to record a refund for security deposit in QBDT. Don't hesitate to add a comment below if you have any other concerns about security deposit, I'm always here to help!

SaaSam
Level 1

Tenant security deposits

I’ve read your steps on creating items and recording tenant security deposits.  It works well and the accounting looks correct.  My questions is when it comes time to refund the deposit and there are costs or damage to deduct from the deposit how are those items recorded.  The method I currently use seems redundant and overly complicated .  I’m hoping you have a simpler way to handle these transactions.

 

Thank you,

 

S adams

HoneyLynn_G
QuickBooks Team

Tenant security deposits

Hello there, @SaaSam.

 

Thank you for joining this thread. I can share some insights about refunding or deducting a deposit.

 

You can record them as a credit card memo, I'll show you how:

  1. Click Customers.
  2. Select Create Credit Memos/Refunds.
  3. Select the customer name.
  4. Enter the necessary information.
  5. Click Save and close.
  6. On the Available Credit window, choose one of the following:
    • Retain as an available credit 
    • Give a refund
    • Apply to an invoice 
  7. Select OK.

 

To provide them the amount, you can either issue a refund through the Receive Payments or Write check window. For detailed instruction, please use this article as a reference: Record a credit memo or refund in QuickBooks Desktop.

 

I also recommend seeking an accountant for an expert's advice to ensure there will be no problem with the books in the future.

 

That's it. Let me know if there's anything else you need, SaaSam. Just add a comment or mention my name. Have a good one.

lhung
Level 1

Tenant security deposits

Perfect! Thank you!

HoneyLynn_G
QuickBooks Team

Tenant security deposits

I'm glad to hear everything is running smoothly, lhung. The Community always has your back if you ever need assistance again in the future. Have a wonderful day ahead.

miranda2
Level 1

Tenant security deposits

Why is 1st month's rent a liability account also? Shouldn't it be an income account?

BettyJaneB
QuickBooks Team

Tenant security deposits

Thanks for joining us here in the Community, @miranda2.

 

Let me share some clarifications about the correct account to be used for rent in QuickBooks Desktop.

 

The liability account was used to account tenants' security deposit since this can be given back to the tenant by the time he stops from renting. On the other hand, rent is recorded under the income amount because this is already a money in transaction for the business. 

 

For more details about the workflow of the accounts in QuickBooks Desktop, you may refer to these articles:

This should get you moving today.

 

Feel free to reach back out to me if you have any other questions with accounts or any QuickBooks related things. I'd be happy to help you out. Have a great day!

Enterprises G-S
Level 2

Tenant security deposits

Hi. 

I would like to know the same steps but in Quickbooks online.

David-212915
QuickBooks Team

Tenant security deposits

It's nice to have you in the thread, @Enterprises G-S. I'd be happy to lend a hand with entering a deposit.

 

You can locate the steps for QuickBooks Online (QBO) in the following article: Record a retainer or deposit.

 

The Community has your back, so don't hesitate to let me know if you need anything. Have a great day.

cdd12
Level 1

Tenant security deposits

How do I record the surrender of a security deposit? The tenant isn't getting any of the deposit back due to damages. I tried the credit memo but that gives the customer a negative balance

THanks!

Adrian_A
Moderator

Tenant security deposits

You can create an invoice to record the surrender security deposit, cdd12.

 

You're correct with the credit memo. This will create a negative balance since this type of transaction is for an over payment or if they have credits.

 

We'll be creating an invoice to charge the damages to your customers. However, it depends on how you record the tenant's deposit. With that said, it would be best to reach out to your accountant. They're the best support that can guide choose the best account to use.

 

Afterward, here's how to create an invoice:

 

If you're using QuickBooks Online, please follow the steps below:

 

  1. Click the + New button.
  2. Under CUSTOMERS, select Invoice.
  3. Select a customer.
  4. Select a PRODUCT/SERVICE, QTY, RATE, and AMOUNT.
  5. Click Save and close.

You can check this article on how to do it in QuickBooks Desktop: Create an invoice in QuickBooks Desktop.

 

Feel free to post again if you still need my help. Thank you.

Amis
Level 1

Tenant security deposits

Hi,

 Sorry but I don't understand. How is it that the security deposit that is being held in the "Tenant Security Deposits Held" account  is being used in your senario. When you give make a credit/refund that amount does not come from the acccount holding the security accounts. I have tried this many different ways and the total in the security deposit account does not get reduced.

dori123
Level 1

Tenant security deposits

Great instructions!

 

I have damages that exceed the security deposit. I created an invoice of those damages, applied the security deposit and sent the balance to the tenant. Tenant paid, but this money is coming in as "other income." It's not income, as this is really reimbursement for expenses that I incurred. 

 

How should I log the incoming money?

 

Thanks!

BlueFox
Level 1

Tenant security deposits

I manage a transitional house that is fully furnished. I am trying to charge a tenant for the disposal of a mattress that was urine stained by the tenant, which had been provided by the owner. I set up an Item, "Disposal Fees", with a Type of "Other Charge" but am unsure of which account to use. I haven't had to do this before and would appreciate any help to get it set up right the first time.  Thanks in advance!

 

WiselyBusSvs
Level 1

Tenant security deposits

This is exactly how it SHOULD work, and always has in both prior desktop versions of QuickBooks and in QBO.   I recently had a client upgrade to desktop 2021 though, and this feature is ALL MESSED UP.  It seems that when you create an item that uses A/R as it's source and targets a Balance Sheet account (like the security deposits payable account we use to collect/track security deposits for short term vacation rentals) it insists on treating those items on the Accrual Basis (and only those items, any item set up to target a P&L account is fine.)  So, if I create an invoice on May 1st because a vacationer arriving July 4th owes $2400 for their week's rent and a $500 security deposit, it posts the $2,400 rent on the cash basis (posts the date the invoice gets paid) but posts the security deposit on May 1st (Crediting the liability and debiting A/R).  It doesn't matter if you run your Balance Sheet on the Cash or Accrual Basis, this is how it handles it.  Which makes it really hard to design controls so that we don't accidentally return a security deposit that was BILLED but never received from the customer!

 

Lola13
Level 1

Tenant security deposits

Hello, I did what you mentioned, but it doesn't show the balance on the customer statement. How can I show that on the customer statement? So I don't have to search through 'security deposit liability account' to find it when I have to return the money.

C_Geil
Level 2

Tenant security deposits

Excellent instruction from KhimG.  Thank you.  I set up my books 20 years ago and I guess I'm having a senior moment.  I've been doing this incorrectly, so made the Sales Receipt for the tenant funds, then went back and deleted the original invoice, payment, and deposit that I had made.  I see that the sales receipt automatically entered the deposit into the correct bank account.  Can you explain how this was done?  I must have attached a deposit account to something somewhere, maybe items?, but I can't recall what I did.  I also see that the deposit date in QB is the same date as the sales receipt, but my actual bank deposit was made one day after. 

 
ErwinQ
QuickBooks Team

Tenant security deposits

Thank you for getting back to the thread, @C_Geil. Let me explain why the sales receipt is auto-deposited to your account in QuickBooks Desktop (QBDT).

In QBDT, if you check your Company Preferences to use Undeposited Funds as a default deposit to the account, the Sale Receipt will be automatically deposited to undeposited funds.

In your case, the default setting for undeposited funds wasn't applied, and possibly you've manually selected or changed it, which caused the funds deposited directly into your account.

I'll show you the steps to change the setting so it won't go directly to your account and will be deposited in the undeposited funds instead.
 
  1. Access your QBDT account.
  2. On the upper left side, go to Edit.
  3. Choose Preferences, then select Payments.
  4. Click on Company preferences.
  5. Tick the box for Use Undeposited Funds as a default deposit to account.
  6. Click Ok.

 

I've added screenshots for visual reference:

 

image (15).png

If you want to deposit to another account, ensure the deposited funds is unchecked from Company preferences and manually select the account from the Deposit section of your sales receipt where you prefer to be deposited.
 
image (14).png

I've added this article to learn how you can receive payments for future help: Get started with customer transaction workflows in QuickBooks Desktop.

 Feel free to reply if you have more questions about managing your bank transactions. I'm always here to lend a hand.
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