cancel
Showing results for 
Search instead for 
Did you mean: 
DebZz
Level 1

Vacation Rental Deposits - Invoices and Unearned Income

Hi,

 

In the past, when we received payments from the rental agent, it was recorded as rent because the guest had already stayed.

 

We now manage our rental so we receive deposits and multiple payments from guests for a future stay. We're a bit unsure how to record this, because if we put the date of the future stay on the invoice, it would confuse the guest. (We want to send them an invoice with payment dates due.)  But if we apply the deposit payments to the invoice, it is recorded as rental income. It seems unlikely the solution is to have multiple invoices, or to create a JE every time a guest arrives.

 

How do we have a correct invoice for the guest and proper accounting for when the payment becomes income?

 

Thanks!

Note: We have an older desktop version of QB.

12 Comments 12
katherinejoyceO
QuickBooks Team

Vacation Rental Deposits - Invoices and Unearned Income

Welcome to the Community, @DebZz. I'll be glad to guide you through the steps in recording prepayment in QuickBooks. 

 

We can start by receiving your client's payment. The payment received will be applied to your client’s future invoice. Let me guide you how: 

 

  1. Go to the Customers menu, then select Receive Payments.
  2. Enter the amount and all other information.
  3. In the lower-left corner, select the LEAVE THIS CREDIT TO BE USED LATER
  4. Click the Save Close button.
  5. Click OK in the pop-up message letting you know that the over-payment will remain in your client's account.

 

To track your client prepayment, click the Customers menu from your home screen. From the left side, the negative balance means your client has an open balance. 

 

You can also pull up the A/R Aging Summary report and customize it to that specific client. Here's how:

 

  1. Go to the Reports menu.
  2. Select Customer Receivables.
  3. Click A/R Aging Summary.

 

Then, to apply the Prepayment to your customer:

 

  1. Click the Customers menu and select Create Invoices.
  2. Fill in the needed details to complete the invoice and click the Save & Close button.
  3. Open the Invoice you’ve created for your client and click Apply Credits from the top corner.
  4. From the Apply Credits window, select the available credit for your customer and click Done.  
  5. Your client invoice will now be marked as paid.

 

In case you need to personalize your invoice, you can use this article to guide you through the complete process: Use and customize form templates.

 

I'm always around to help you more about recording prepayment if you have additional concerns, @DebZz. Have a great day. 

DebZz
Level 1

Vacation Rental Deposits - Invoices and Unearned Income

Hi Katherine,

 

Thanks for your answer.

 

I'm not sure I understand. We don't start with receiving payment. We actually start with sending the guest an invoice showing the deposit and final payments due. I'm not sure what you mean by "future invoice."

For example, today (Jan. 1)  someone books a vacation stay for July 1 - 8. We send an invoice dated today that shows $1000 deposit is due upon booking, and the final payment of $2000 is due by June 1st. Now, the $3000 is not "rent" (earnings) until the guest actually stays at the house. So the rent only becomes income on arrival date. 

 

We have to invoice the guests first. As they pay, we send updated invoices. In the past, we did not send invoices - our agent just sent us the money after the guest's departure.  When we received the money, it was earnings. (And had expenses attached to the stay.)  Now, we are receiving money that will some day become earnings.  We don't know how to create the invoices and what accounts to use .... I mean, we can change the accounts for the "Rent and Expenses" on the invoice to some holding/unearned type of account.  But in the future, do we have to manually make JE each time a guest checks in to move the deposit to income?  Is there some elegant way to use QB to handle this?

 

Hope this clarifies our question.

 

Thanks!

DebZz
Level 1

Vacation Rental Deposits - Invoices and Unearned Income

 
RCV
QuickBooks Team
QuickBooks Team

Vacation Rental Deposits - Invoices and Unearned Income

Thanks for coming back and providing us in-depth details of your concern, DebZz.

 

Since your agent sends you the money after the guest's departure, we can set up progress invoices in QuickBooks Desktop. Instead of asking for full payment, we can invoice customers for partial payments. As you complete work, add items from the initial estimate to progress invoices. This keeps payments organized and connected from start to finish. Let's turn on progress invoicing by following the steps below:

  1. Log in to QuickBooks Desktop as an admin.
  2. Go to the File menu and select Switch to Single-user mode.
  3. Click the Edit menu and tap Preferences.
  4. Tick Jobs & Estimates from the list of menus.
  5. Choose the Company Preferences tab.
  6. Select Yes in the DO YOU CREATE ESTIMATES? section. Then hit Yes in the DO YOU DO PROGRESS INVOICING? section.
  7. Press OK to save and close your preferences. Then, go back to the File menu and select Switch to Multi-user mode if you need to have this mode. 

Once done, follow the steps in the Set up and send progress invoices in QuickBooks Desktop article to create pross invoicing. Feel free to visit our Sales and customers page for more insights about managing your company's income and customers.

 

I'd like to know how you get on after trying the steps, as I want to ensure this is resolved for you. Feel free to reply to this post and I'll get back to you. Take care always. 

DebZz
Level 1

Vacation Rental Deposits - Invoices and Unearned Income

I'm sorry, you don't seem to have read my entire question. To clarify:

 

We no longer have an agent. That was in the PAST. We are CURRENTLY invoicing our guests directly, and as I said in the first post, they are sending us DEPOSITS FOR A FUTURE STAY.  We cannot apply these payments to their invoice because it is NOT rental income until they arrive, which could be more than a year from now.

 

"In the past, we did not send invoices - our agent just sent us the money after the guest's departure.  When we received the money, it was earnings. (And had expenses attached to the stay.)  Now, we are receiving money that will some day become earnings. "

 

Example:  Guest makes a reservation for June 1st. I send an invoice dated today, January 4th.  Deposit is due Jan 4th. Second payment is due May 1st. EARNINGS ARE REALIZED on June 1st. I am asking how to invoice a guest for a FUTURE stay and somehow apply payments to the invoice without too many manual steps because even though money is due now, it is NOT "rent" until June 1st.  Having a progressive invoice does not address that issue.

 

Thanks!

AileneA
QuickBooks Team

Vacation Rental Deposits - Invoices and Unearned Income

Hello, DebZz. 

 

We can record it as a prepayment and applied it to the future invoice since your earning account recognizes it on June 1. Then you can receive the payment that was due on January 4. You can follow my colleague's steps above on how to receive payment for the future invoice in QuickBooks Desktop. 

 

Once done, you can trace your customer prepayment, click the Customers menu, then verify if there is a negative balance, It indicates that your client has overpaid. 

 

To locate the over payments, we can run Customer Accounts Receivable report. You can find this in the menu under Reports, then Customers & Receivables, and click A/R Aging Summary.

 

For more detailed information about recording prepayment in QuickBooks, you can refer to this video presented by QuickBooks: How to Record Customer Prepayments

 

Please let me know if there's anything else you need. I'd be glad to assist you. Stay safe, and Have a great day!

DebZz
Level 1

Vacation Rental Deposits - Invoices and Unearned Income

Thank you. I have re-read the emails again to see if I missed something. I apologize but I just don't see how these "solutions" apply to vacation rental income.  Please read my specific example and dates in the previous posts. 

 

First, FIRST, I send an invoice to our guest outlining fees and payment schedule. I MUST send them an invoice before we get paid!!

 

Second, we receive scheduled payments.

 

I assume I have to switch out the "Rent" account to something else on the invoices now that we no longer have an agent.  I also suppose we are to hold the money someplace (I assume as a liability account called Unearned Rent or something?) then we wait and realize rental income only when the guest stays at our rental, which could be a year from now.  BUT - How to do this in an elegant manner?

 

1. How EXACTLY am I invoicing my guests??  No one has addressed this yet.  I don't feel that making a "for books only" invoice after the fact makes any sense. 

2. What specific accounts am I setting up on the invoice that is sent to the guest? 

What dates are on the invoice? In order for it to make sense to the guest, it should be dated TODAY, day of booking.  Can I have today's date on the invoice and future dates triggered somehow for applying the payments?  These scheduled payments are NOT "overpayments." They are payments due and paid on time. 

3. It's the realization of income that is in the future. How and when do I trigger the transfer of unearned rent to earned rent?  So far I still only see that a JE makes sense.

 

The "estimate" suggestion does not provide accurate accounting of the deposits and final payments.

Neither does having a guest "credit." I do not owe them money, and they did not overpay. 

 

I have a very basic older desktop version. I use customers and jobs already for the guests and rentals.

 

Isn't there some elegant, built-in method for vacation rental accounting without all the mumbo jumbo?? 

 

Thanks! 

DebZz
Level 1

Vacation Rental Deposits - Invoices and Unearned Income

Hi, I'm still hoping to get answers that make sense and also to have the previous posters answer direct questions, as they didn't seem to respond to or understand my initial question.

 

Thanks, everyone!

lmbart
Level 2

Vacation Rental Deposits - Invoices and Unearned Income

I have a similar situation and am looking for clarification.  If you have found and answer, I am interested.  Thank you so much in advance! 

Maybelle_S
QuickBooks Team

Vacation Rental Deposits - Invoices and Unearned Income

Hello there, @lmbart.

 

Would you mind sharing the business workflow? This way, I'll be able to provide accurate steps to record the rental properties and help manage the tenants.

 

Moreover, you can create checks for your purchases and renovations, then set up tenants as sub-customers. And the main customers as properties.

 

Check out this article to learn more information about managing rental property and property management: Record transactions for a property management company.

 

I've also included an article that'll help you in understanding the chart of accounts in QuickBooks. This way, you'll know how much money you have and owe in each account: Understand the chart of accounts in QuickBooks.

 

Keep me posted if you have other QuickBooks-related questions. I'll be around to help. Take care!

lmbart
Level 2

Vacation Rental Deposits - Invoices and Unearned Income

Customer calls and books the property today for a reservation date next year.  I would like the ability to create a ??? (estimate, invoice???) to indicate what the total will be for the reservation and then track any payments related to that reservation.

 

Example:

Booked 8/10/2021

Reservation Dates: 7/10/2022-7/17/2022

Payments Due: 50% within 7 days of booking (8/17/2021); additional 50% 7 days prior to check in (7/3/2022)

Payments Made: 8/15/2021 = $500 & 6/15/2022 = $500

 

Does the payment in 2021 get recorded in 2021 ($500) and the payment for 2022 ($500) get recorded then OR does all the income ($1000) not appear until 2022

 

Hope this helps clarify.  I did review the items you referenced prior to your post and it wasn't of much help.  I have also reviewed the retainer information I found and that did not seem to help either.

 

Ryan_M
QuickBooks Team

Vacation Rental Deposits - Invoices and Unearned Income

Thank you for the prompt reply, and I appreciate the details you included in your post, @lmbart. I'll take care of this query for you.

 

You can follow the answer provided by my peer @RCV and use progress invoicing. It requires a single estimate transaction that you can split into several invoices. To enable this feature, follow the steps below:

 

  1. Log in to your QuickBooks Desktop (QBDT) company as an admin.
  2. Go to the File menu, then select Switch to Single-user mode.
  3. Move to the Edit menu, then choose Preferences.
  4. Click Jobs & Estimates from the list.
  5. Tap the Company Preferences tab.This is an image of the Jobs and Estimates tab in the Preferences menu. It shows Yes selected for the do you create estimates and do you do progress invoicing sections.
  6. Hit Yes in the DO YOU CREATE ESTIMATES? section. Then select Yes in the DO YOU DO PROGRESS INVOICING? section.
  7. Press OK.

 

The next step is to create an estimate. Here's how:

 

  1. Move to the Customers menu, then select Create Estimates.
  2. Choose the customer in question.
  3. Fill out the rest of the estimate.
  4. Hit Save & Close.

 

Lastly, here's how to create progress invoices:

 

  1. Go to the Customers menu, then select Customer Center.
  2. Choose your customer on the list.
  3. Open the estimate in question on the customer's page.
  4. Tap Create invoice from the toolbar.
  5. Select Create invoice for a percentage of the entire estimate, then enter 50.This image shows three options for how you much you want to create a progress invoice for.
  6. Fill out the rest of the invoice, then send it to your customer.

 

Check out this article for additional information: Set up and send progress invoices in QuickBooks Desktop

 

As for your other questions about the payments, since they're two separate invoices, payments are recorded separately as well. You can run the Sales by Customer Detail report to confirm after you record both payments. I'll also share this article with you for reference: Customize customer, job, and sales reports in QuickBooks Desktop

 

Let me know in the comments below if you have other questions about rentals in QBDT, and I'll be glad to assist you further. Have a pleasant day!

Need to get in touch?

Contact us
Sign in for the best experience
Ask questions, get answers, and join our large community of QuickBooks users.
Sign In / Sign Up