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I have a paid parking lot with daily and/or monthly prepaid customers. How do I account for a monthly rental client that pays for a year in advance in October? (The client's fiscal year is 10/1/21 - 9/30/22.) If/when I send them invoices for 12 months and they pay the entire amount, the total amount shows as income for October. How can I set up QuickBooks so that it only shows income in one-month-at-a-time increments? I want to see the income as if paid each month instead of all paid in one lump in October.
I can help you with tracking the prepaid rental payment income, @jlm516.
You can create a liability account to set up an account for upfront deposits. Once the account is created, set up an item to use when you record the associated transactions. Then, create a sales receipt to record those deposits and then an invoice. When you received the payment, apply that deposit to invoices.
Here’s how to create a liability account:
Create an item:
Once you're done, create a Sales Receipt and Invoice from the Customers menu.
For detailed guidance in recording this transaction and applying upfront deposits to invoices, refer to the following article: Manage upfront deposits or retainers.
Progress invoicing might also work for you. It's the process of invoicing customers for partial payments. The following article will guide you in turning this feature on and creating those invoices: Set up and send progress invoices in QuickBooks Desktop.
If you have more questions about recording these transactions, feel free to click the Reply button below. I'll get back to you as soon as I can. Have a good one!
I don't think the "upfront deposits/retainers" will work for us. On 9/15/21, I send the customer an invoice for 10/1/21 thru 9/30/22 (a total of 12 months). The customers pays the entire invoice on 10/1/21. Instead of showing the entire payment as income in October, I want to be able to have it reflected as income each month; one month at a time.
Hi jlm516!
Thanks for the reply. Let me further explain and help you in recording this kind of payment.
Ideally, the advance payments from your customers are not considered as part of your income yet but a liability until they are used to pay for a service or product. This is how an upfront deposit or retainer works.
You'll need to track them using a liability account. Then, you can create separate invoices for each month and convert these liabilities into an income by applying them as payments to the invoice.
For other options, you'll want to consult your accountant and see if they have a better way to enter these deposits.
Also, I added this link you can check: Get started with Bank Feeds for QuickBooks Desktop. This will show you how to connect your bank and credit card account to QuickBooks Desktop, and how to categorize the downloaded transactions.
Keep on posting here if you need more clarifications. Have a great day!
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