How to account for deposits for advance bookings. Sometimes for events in the following tax year

I understood the deposit has to be separated from the income till the final invoice is issued (mostly if the final invoice is issued in the next financial year).
When I receive the payment (for the deposit invoice), can I state somewhere that this is a deposit, not an income? I thought lots of people do this and there is an easy solution. What I’m doing wrong?

Unfortunately, it seems that I’m more confused now then when I started the topic.

  1. I understood there is a solution where I tag money to the client account, not to an invoice, until the invoice is issued. But, without an invoice, there is no document to send to my client to ask for the payment.

  2. The second solution is with two invoices:
    One for the deposit and another one for the final payment. If I issue the invoice for deposit in this financial year in an ordinary way and the final one in the next financial year, QuickFile will calculate the deposit as an income for this financial year, which I understood it’s not right (please correct me if I’m wrong).

It looks like two incomplete solutions.
What is missing?
I’m wrong?

There is a way to issue a receipt with QuickFile for my client when I receive the money, for the first situation (1.)?

That is correct, although it will appear on the clients account so you could send them a statement, or you could just send them a document not created in Quickfile.

That is correct again.

I’m not sure why you think this is incorrect?

Both solutions are complete financially, the only thing missing is an actual Quickfile feature to directly handle deposits but beyond that they are nothing more than prepayments/payments on account.

The easy way here is to issue a proforma invoice/receipt for the deposit, outside the accounting system. Then treat the receipt as a receipt from customer. It will sit on the customer’s account as a credit balance until you issue the invoice later.

When it comes to the annual accounts, you can enter a reversing journal entry to add to debtors (debit entry) and add to “Deposits received in advance” (credit entry) for the total of these balances o/s at the year end. By making it a reversing journal entry, it should “self-right” on the first day of the new accounting period.

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I have similar format of transactions in my business. we take a deposit, an interim payment and then a final payment over a period of 6 months to a Year. We have set up cash accounting ( VAT & Profit And loss purposes) as opposed to based on Accruals.
So raise the a full invoice to the value of price agreed and start taking payments towards this invoice. This way the client also knows exactly how much they have paid and how much is due.
As for VAT and Tax - they are calculated based actual payments Received ( and not accruals )
This will also affect your Purchases, Bills and Expenses.

Thank you so much for the info up to now.