Deposits are typically refundable. But there can be certain deposits that are non-refundable. The focus of this article is to explain non-refundable deposits. If you need to record refundable deposits refer to this article.
A non-refundable deposit is a deposit that a tenant can not request back.
Examples for non-refundable deposits include:
- Parking Deposits
- Pet Deposits
- Key Deposits
- Storage Deposits
To record a non-refundable deposit:
- Go to ‘Accounting’ Tab and click onto ‘Add’ dropdown and select add ‘Income’.
- Enter Invoice Date and Due Date
- Charge Tenant or Owner by selecting the Payer
- Select the Property
- Select the income account you want to <Credit>
- Amount of non-refundable deposit amount
Once an income has been recorded as a charge you can mark it as ‘paid’ once payment has been received.
- Non-refundable deposits is always an income account. If you need to add another income account for a non-refundable deposit, go to Chart of Accounts and add a new account.
- Non-refundable deposits are listed as income and appear on income statement and owner statements.
- If you receive a payment from a tenant that you are required to return at a later date then it is a refundable deposit and should be recorded as a liability <read refundable deposit>.
- If a payment is for a compensation like rent or late fees, it should be recorded as income.
- Some areas have specific laws regarding the handling of non-refundable deposits. If this is the case for you, please consult your accountant to ensure compliance.
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