Security Deposits are usually paid to secure goods and services that have not yet been provided. This kind of deposit is usually forfeitable . Note that the booking of these transactions can be complex due to timing considerations with respect to when you are able to claim or become liable for tax. Accordingly it differs depending on your Zone. As an example; Security Deposits versus Pre-payments and also whether you report tax on a Cash or an Accruals basis will mean variations in how you account for these transactions. Accordingly one example cannot begin to cover the various situations that can occur. The example is designed to give you an idea of how the Deposit feature in the online accounting application can be used.

Tax report treatment of Deposits

Deposits against Purchase Orders or Sales Orders may or may not be reportable for tax remittances. This is because Saasu can tell if the deposit relates to goods or services that haven’t been supplied yet or if it is actually a prepayment where tax isn’t payable until a later date etc. There are many situations. So Saasu’s tax reports don’t include these payments until you have converted Sales or Purchases of type ‘Orders’ to the type ‘Invoice’ or ‘Bill’ etc.

Example

In this example we are Bed and Breakfast business taking a Security Deposit for Accommodation. The same applies for entering a Purchase Deposit if you are a business who is paying for accommodation in advance.

Step 1. Initial Security Deposit

1. From the main menu choose the add icon to add a new Sale.
2. Choose the type of Sale your would like to create from the first pick list. Service or Item.
3. Choose Order from the second pick list
4. Fill in the Contact and other fields as required
5. Add the items to the Sales Order as required
6. Apply a Quick Payment for the amount of the security deposit received
7. Click save and then print/email as required before closing the Sales Order

When you create a Sales Order and apply a Security Deposit the following system entry occurs in your online accounting file:

Saasu is storing the money as a Loan until you convert it from Sales Order to Sales Invoice at a future date.

Step 2. Balance of payment

Later when you receive payment for the balance change the Sales Order status to Sales Invoice and save it.

When this change is saved another system entry moves the funds from the Loan:Deposits Received category to the Income:Accommodation category:

Step 3. Apply the balance of the payment

Apply a payment for the balance of the funds received. Print/email the finalised Sale if required

Zone Information

For information regarding the GST/VAT/Sales Tax implications for Deposits and Pre-payments search your zones Tax Authority website for security deposits, part-payments, payments, deposits or similar.