Daniel shows two ways to record customer deposits in QuickBooks Online. The simple method records full revenue immediately, misstating income if the job finishes later. The better approach uses a liability account so deposits don't count as revenue until the job is complete.
Hi, this is Daniel from BookkeepingForPainters.com, and this video is about taking a customer, customer deposit in QuickBooks Online. So in this video, I'm going to review two different ways to receive a deposit in QuickBooks Online and go over a couple examples. So there's two basic ways that you can receive deposits in QuickBooks Online. The first one is just adding a deposit field on your invoices. And typing in the amount of the deposit when you need to receive a deposit. This way is pretty easy to do. The only problem with it is that you'll actually show the revenue as received in the amount of the invoice for the month the invoice is dated. So maybe you receive a deposit— so that's okay if you like start and finish the job in the same month and you invoice the customer for the deposit and you— and you complete it in the same month, that's fine. The problem— you run into problems when you receive a deposit but then you actually don't finish the job until a month or two later and then you run into an issue where you'll actually create an invoice plug in your deposit amount with your total invoice in the first month, but— and then on your income statement you'll show that as revenue, but you actually didn't complete the job until a month or two later. So that's not good. So if that's the case you're running into, try option 2, which is you actually create a deposit item under products and services. This is a lot more accurate, and especially for these jobs where you receive a deposit, but it actually don't finish into a later month. Um, and, but this method is a little bit more difficult, but we'll review how to do that. First, we'll go over option 1, adding the deposit field to the invoice. So, uh, what you do is open the gear icon, go to company settings. You're going to make sure that your deposit line is turned on. Go to sales tab here, and then under sales form content, go to deposit and ensure it says on. And make sure it's checked and everything. Click Save and close out. So now we know that our deposit lines are on our invoices. So we're going to create an invoice with the plus sign, go to under Customers, Create Invoice. So what you want to do is whatever the amount of the job was, say the job was $5,000, and then you received a 10% deposit of $500. $500, you'll notice that there's a deposit line here. You put the amount of deposit you received from the customer and it would subtract out to give the balance due. Now from here you would hit Save and Close. Now one thing to note here is, you know, the invoice date is March 29th, so on your income statement you will have sales of $5,000 because of this job. So if it's the end of the job and everything, that's great. But maybe you receive the deposit, you want to receive the deposit, but you actually are not going to finish this job until the middle of April. So you wouldn't want to do receive a deposit this way because you don't want to show that you received $5,000 of revenue in April You want to take a deposit and then create another invoice, which we'll do in this next method. So, all right, so let's go over the next method here. Option 2, create an item for the deposit, and we're going to create a new item and we're going to tie that item to another current liability account. On your chart of accounts. And then we're creating an invoice to receive the deposit. And then, then we're going to create a second invoice to— at the end of the job to receive the total amount from the customer and subtract that, that customer deposit out of that invoice. And I'll show you how to do that here in a second. So first you go to your gear icon, go to products and services under lists. And you go to the New button, Create Service, and Customer Deposit. Let's call it Customer Deposit. And you're, you're going to tie it to a certain account. And this account should be a current liability account. More than likely you create a, an other current liability account. I have one called unearned revenue. Which would be the deposit. You haven't earned it yet, it's just you're receiving as deposit. So, um, you'd hit save and close here. Actually already have that created, so I'm just going to X out and you should see your new item here, customer deposit, on your products and services list. So the— when you receive the customer deposit from the, the client. Um, on March 29th, you make sure you choose your item, Customer Deposit, and you make it $500 using the same numbers as the last example. So what this is going to do is going to create $500 liability on your balance sheet for unearned revenue. And we're gonna go ahead and hit Save and Close. And then let's say a couple weeks later is when we actually finish the job and we want to invoice the customer to receive the final amount from them. And so We put our total amount here, which was $5,000, and then we put our deposit. Now we want to put a negative amount because, one, we're subtracting, we're taking the liability off our balance sheet, and then we're also reducing the amount that the customer actually owes because they already paid us $500, so they wouldn't owe us the full $5,000. They only owe us the $4,500. All right, so from, from here you are completed. And that's how to do— that's how to receive customer deposits in QuickBooks Online in two different ways. If you'd like any other bookkeeping or tax tips, make sure you go to bookkeepingforpainters.com and get your free report on and get some useful tips on how to do some stuff in QuickBooks Online and to save on taxes. Hopefully this video was helpful. Appreciate it.
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