Deposits and Pre-payments

Deposits are automatically created in Saasu when you apply a payment to a Sales Order or a Purchase Order.

When Sale Orders (or Purchase Orders) are created and coded to a relevant Income (or Expense) account, Saasu holds the money in a Liability: Deposits Received (or Asset: Deposits Paid) account instead. If you apply multiple payments over time, Saasu treats them all as a deposit and holds them in the Liability: Deposits Received account (or Asset: Deposits Paid) account. When the transaction is complete and you convert it to a Tax Invoice, Saasu transfers the money from the Deposit account to the Income (or Expense) account that was originally nominated. This transaction is called a Sale Deposit Transfer (SDT) or a Purchase Deposit Transfer (PDT).

Security Deposits

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 booking these transactions can be complex because of timing considerations regarding when you are able to claim or become liable for tax. The situation also differs depending on your zone. For example, security deposits compared to prepayments (and also whether you report tax on a Cash or an Accruals basis) will result in variations in the way you account for these transactions. Consequently, one example cannot begin to cover the range of situations that can occur. The following example is designed to give you an idea of how the deposit feature can be used in the online accounting application.

Deposits against purchase orders or sales orders may or may not be reportable for tax remittances. This is because Saasu can’t tell if the deposit relates to goods or services that haven’t been supplied yet, or whether it is actually a prepayment where tax isn’t payable until a later date, etc. Because there are several different scenarios, Saasu’s tax reports don’t include these payments until you have converted sales or purchases of the type Orders to the type Invoice or Bill, etc.

Example: Security Deposit or Pre-Payment

In this example, we are a Bed and Breakfast business taking a security deposit for accommodation. The same applies when entering a purchase deposit if you are a business paying for accommodation in advance.

Step 1. Initial Security Deposit

  1. From the main menu, select Add > Sale.
  2. Choose the type of sale your would like to create from the first pick list (eg order instead of tax invoice).
  3. Fill in the contact and other fields as required.
  4. Add the items to the sales order as required.
  5. Apply a quick payment for the amount of the security deposit received.
  6. Click save.
  7. Print or email as required.
  8. 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:

CREDITLiability:Deposits Received

Saasu stores the money as a loan until you convert it from a sales order to a sales invoice at a future date.

Step 2. Balance of Payment

Later, when you receive payment for the balance, change the order status to Tax Invoice and save your changes.

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

DEBITLiability:Deposits Received

Step 3. Apply the Balance of the Payment

  1. Apply a payment for the balance of the funds received.
  2. Print or email the finalised sale (if required).

Deposit for multiple future sales

This method is a way to handle a refundable deposit taken in advance of Invoicing of customers for using services.

In this example a $1,000 deposit is taken by a Base Jump adventure company being for 4 base jumps on various dates in the future not yet known. We take all the payment upfront and code it to a Liability account we create for this kind of special Deposit. Then as Jumps are taken we reverse it out of this account and put it into an Income account.

Step 1: Deposit received for $1,000 up front

  1. Go to Add > Sale.
  2. Choose Invoice and select the Contact.
  3. Set the Date to be the date the deposit was taken.
  4. Include an appropriate summary.
  5. Set the Layout to Service.
  6. Enter the line items in the invoice as follows (use + to add a line item):
    Liability: Deposits for Base JumpsNo Code1,000.00
  7. Apply the $1,000.00 payment to the transaction.
  8. Save and Email/Print the transaction.

Step 2: A Base jump is completed

  1. Go to Add > Sale
  2. Select Invoice and select the Contact
  3. Enter the Date as the date the jump was taken.
  4. Enter an appropriate Summary indicating the use of a Base Jump
  5. Set the Layout to Service.
  6. Enter the line items in the invoice as follows (use + to add a line item):
    Liability: Deposits for Base JumpsNo Code-250.00
    Income: Base JumpsYour GST/VAT Code250.00
  7. Add a payment of $0 to this transaction using a special bank account you setup called Asset: General Clearing
  8. Save and Email/Print the $0 transaction.

Repeat Step 2 for the next 3 jumps and then the Deposit account will be clear and all $1,000 will apear in the Income: Base Jumps account in your Profit and Loss.

Deposits and Tax Zones

For information regarding the GST/VAT/Sales tax implications for deposits and prepayments, search your tax zone’s tax authority website for security deposits, part-payments, payments, deposits or similar. The rules for tax treatment of deposits differ greatly.