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Level 3

How to record a returned security deposit after we closed an office

Hi.  We have been using Quickbooks for about 2 years.  We recently received a check back for a security deposit that we had made probably 15 years ago when we first opened that particular office.  I know that I do not want to record this $3750 as income as then it would count as income for a B&O tax and it wouldn't be subject to that tax, so how would you recommend that I record it?  I feel like it needs to be some sort of negative rent expense?  But not exactly sure how to make that happen.  


Thanks in advance.  


2 Comments 2
QuickBooks Team

How to record a returned security deposit after we closed an office

Welcome to the Community, @kb111. I’m here to walk you through the steps of how to record a security deposit in QuickBooks Desktop.


You can enter the amount as a credit to pay the invoice when applying an upfront deposit or retainer.


Here’s how:

  1. Go to the Customers menu,
  2. Choose Create Credit Memos/Refunds.
  3. From the Customer: Job drop-down list, select the appropriate customer or job.

  4. In the Detail section, select the security deposit item that you've used from the Item drop-down list.
  5. Enter the amount to be refunded in the Amount field, then select Save and Close.
  6. In the Available Credit pop-up dialog that appears, select Give a refund and hit OK to close the dialog.
  7. In the Issue a Refund dialog that appears, select the bank account where the deposit was originally deposited from the Account drop-down list.
  8. Click OK to close the dialog. You may specify how to refund the customer using the options on the Issue this refund via drop-down menu.
  9. When you're done, hit Save and Close.

For more details about managing your upfront deposits or retainers, feel free to check out this article.


Moreover, I've got this helpful resource to guide you further on recording transactions for a property management company that may come in handy in the future.


If you have any further questions or concerns about managing your transactions in QBDT, please know that you can always tag my name. I'm here to help you in any way I can. Enjoy your day! 

Level 13

How to record a returned security deposit after we closed an office



I assume this security deposit is not on your books?  When security deposits are paid, they should be recorded as an asset and, when returned, recorded as a reduction of that asset.  However, if you do not have that particular security deposit on your balance sheet as an asset, you should enter it as a deposit into owner's/partners/shareholders equity, as appropriate.  That will increase your cash balance and equity but have no effect on income.  If this is a sole proprietorship, this is straightforward.  If it's a partnership or S-corp, then split the equity between the partner's/shareholders.

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