Deposit accepted in advance

pdallen1970

I am using Quicken H&B for our B&B. When a guest books, I create an invoice with the date of the reservation and with the check-out date as the due date. At that time, we charge one night's stay as a deposit.

Historically, I have charged their card and created a new payment on that date BUT, I really need to be showing that payment as revenue when their stay is completed. According to the state, it is not revenue until after the service has been used.

So, how can I do this? I need to be sure the revenue is showing in the proper category "Room Charge" in the month the payment is received, not just on the invoice. I was thinking that I could create a "Guest Deposits" account that the payment would go into (and not apply the payment to the open invoice). That would create a credit on account? Then, when they check out apply the existing credit?

I tried "playing" with this but was afraid I was overlooking something and would create a bigger problem later on. During Covid, being essentially closed, is the time to get this squared away and working properly. Any help/advice is appreciated!

Frankx

Hi @pdallen1970,

I believe that you are on the right track. You should setup a business liability account - you can call it "Guest Deposits" as you suggested.  The account will generally have a credit balance.  When the guest checks out, you will simply transfer their deposit to your "Room Income" (or whatever you call your business revenue/income account).

I am not sure whether you are collecting state taxes and/or perhaps local taxes related to this income, but if you are, you would not split out the taxes until you make the entry to move the income from the deposit account to the revenue/income account.

Let me know if you have any followups.

Frankx

pdallen1970

I am collecting rooms tax, so for round numbers a guest books a $100 room for 2 nights which is subject to a 10% rooms tax. The total invoice is $220. I would create a new guest payment for $110 net and deposit it to the liability account. How do I "transfer" THEIR deposit when they check out? I am assuming the guest has a CREDIT of $110 and I can apply that credit to the invoice?

Frankx

You would make that transfer transaction in the register for the Guest Deposit liability account.  Here's what that account might look like:



I couldn't get the split to show up in the above "snip" but the breakdown was:

Rental Income        - 100.00
Local Tax Withheld -   10.00

Let me know if you have any additional questions.

Frankx

pdallen1970

I have each of my guests set up as a "customer", so I am not sure how I would get the transfer to pay down their balance due?

If I just go to "New Guest Payment" and say $110 deposited to Paypal and don't select an open invoice, it creates a $110 credit for the customer. I "assume" that once I apply that $110 it would be categorized accordingly? Frankly, I can post-date that to the day of checkout then print the invoice so that it shows the net due.

Frankx

Okay - so you've setup accounts receivable accounts for each guest?  I believe that's a little unusual for your type of business. 

Usually accounts receivable would be used for ongoing customer relationships where the customers make purchases for goods or services that they regularly receive and then pay for all such goods or services purchased during the month at the end of the month when they receive an invoice.  So they purchase "on account" and then pay a monthly billing after the fact.

I could be wrong, but I assumed that you actually receive the money (or at least the deposit) before they've received the services - which is the opposite of the accounts receivable notion.

Frankx

pdallen1970

Yes - every guest has a customer account - I need to be able to look back and see when folks were here, store their email addresses, and see a history of their stays with us. Each invoice has information about that particular stay - room booked, arrival times, dates of stay, etc.

I *do* receive some of the money before their stay, therein my question about how to record that money which will be applied to their balance on their invoice on the day the check out.

I have been playing with this off and on and it appears that I can create a new customer payment but not apply it to the open invoice at that time which generates a credit, then go to the invoice and record a payment dated for the check out date and using the credit balance only. That would record the revenue in the month they checked out? Keep in mind that many of my guests are repeat guests and book months in advance.

I appreciate your feedback as I try to think this through.

Frankx

Hi again @pdallen1970,

You said "I can create a new customer payment but not apply it to the open invoice at that time which generates a credit, then go to the invoice and record a payment dated for the check out date and using the credit balance only." 

Yes, I think that would work. When issuing the invoice you would post that to a balance sheet account (like "Customer Deposits") rather than an income account (which is usually the case).

Frankx

pdallen1970

That last part made no sense to me. I wish I could just make journal entries to make this work. My invoices have rooms (items) and "Room Charge" as the category. All of my reports for taxes are based on that setup. I am trying to avoid a complete overhaul of my reports and everything else for consistency with past revenue and so that I don't lose historical info. If I have to make these drastic changes, then now may be the time to jump ship and go to [removed].