We are a transportation company and we take a security deposit from our drivers which we reimburse when they leave the company.
I created an account called Drivers Security Deposits (other current liabilities) where I record the amount received from each driver for security deposit.
When they leave, sometimes we need to charge them for damages, repairs, etc.
My questions is how I should record the amount that we are not refunding, so the balance for the liability account to be zero? Should I use an expense account?
Yes, you should reduce the liability by recording to the same expense account where the damage/repair costs were recorded.
Hope this answers your question.
Nancy in Arizona
I'd be interested in how you are managing a high volume of security deposits? It gets pretty tedious to log all of this activity (for us, it is about 40+ deposits a month) and our accounting team came up with a workaround using a qb/Stripe for payments.
Is your team using anything special for this? I am looking for any way to improve efficiency.