Handling a room reservation deposit

innkeeper_sidecarinn · ‎March 09, 2022

Hi,

In July I opened my B&B and hosted my first guests. When booking, I collect the first night's room rate plus taxes as a deposit. I entered this in QB by creating an invoice, and then applying the initial payment to that invoice. What I have just noticed is that QB is aging the A/R because of the course it is past 30-days and a balance is unpaid. It is also incrementing the sales tax liability even though it is not due until the month of check in. This could be up to 11 months away. Since all of my 2021 reservations have been completed, and I only have a couple of reservations at the moment, there isn't time crunch to solve this for a couple of weeks.

I have looked at these two articles: https://quickbooks.intuit.com/learn-support/en-us/help-article/invoicing/manage-upfront-deposits-ret... and https://quickbooks.intuit.com/learn-support/en-us/reports-and-accounting/what-is-the-correct-procedu... but neither seems to work for me on QB desktop for Mac 2019. I tried the first method above using a credit memo and thought it was good, as my customer deposit account increased, but I don't seem to have a way to deposit those funds into the bank account as the undeposited funds account remained at zero. I have an item for deposits, that points to my customer deposits account.

Thanks in advance for advice on how to solve.

Roger

AbegailS_ · ‎March 09, 2022

Hello, @innkeeper_sidecarinn.

Thank you for providing detailed information about your concern.

Let me share some insights about recording your transactions.

The option to record a reservation deposit is currently unavailable in QuickBooks. That's why it won't show up in your undeposited funds.

That said, I suggest looking for a third-party app that you can integrate with QuickBooks to accomplish the task.

You can visit this page to view some application that suits your business' needs: App center.

You can also reach out to your accountant to ask for guidance on how to record the reservation.

Moreover, I'd also recommend reconciling your accounts every month. This way, you can monitor the growth of your business and detect errors early. For the detailed steps, kindly refer to this article: Reconcile bank and credit card accounts (Mac). It carefully explains the process and provides a step-by-step guide on how to execute it.

As always, feel free to visit our QuickBooks Community help website if you need tips and related articles in the future.

Please touch base with me here for all of your QuickBooks needs, I'm always happy to help. Have a good one and keep safe.

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Rainflurry · ‎March 10, 2022

@innkeeper_sidecarinn

You can receive the deposit payment from the customer by going to Customers>Receive Payments. In QB, for this to be shown as a credit on the customer's account, you must assign the payment to an accounts receivable (A/R) account. This will deposit the money into the bank account you specify and keep the payment on the customer's account waiting to be applied to the invoice you create upon customer check-in. When you apply the credit to the invoice, it will remove the deposit from their account and reduce the amount due on the invoice. This way, there is no invoice created showing past due and no sales tax applicable until the invoice is created a check-in.

I would suggest setting up an A/R account called 'Customer Deposits' so you can run a report to see the total deposits received. This is important because the IRS treats advance payments of rent as income in the year received. Therefore, you will need to report those deposits as income upon receipt and you will need this separate account to track them.

Being an engineer, you may appreciate the accounting part of it: From an accounting perspective, this deposit is, technically, not a reduction of A/R but rather an increase in a liability (you owe the customer something for their deposit). Not to get too far in the weeds but, both a reduction in A/R and an increase in liability are credits in accounting terms so this process still works. It's just that, in order to assign the deposit as a credit to a specific customer, it needs to be recorded as a reduction in A/R, not an increase in liabilities.

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Rainflurry · ‎April 02, 2022

@innkeeper_sidecarinn

I don't see any screenshots attached. However, I think what is happening is that you're not using the same accounts receivable (A/R) account for the deposit paid in advance, the invoice created at check-in, and the payment received on that invoice. You must use the same A/R account for all three transactions (two transactions if you click the receive payment button while in the invoice).

If you set up a 'Customer Deposit' A/R account, you will use that for all three transactions. It's not necessary to use the 'Customer Deposit' A/R account, you can just use the default A/R account if it's easier.

Then, when you create the invoice upon customer check-in (don't forget to select the proper A/R account), click "Apply Credits" on the top menu and you will see the customer deposit credit in the "Apply Credits" window. Select the customer deposit and it will apply the credit to the invoice, leaving the remaining balance due. Collect payment and you're golden.

Let me know if that doesn't work.

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AbegailS_ · ‎March 09, 2022