Seasonal deposits

Correctly recording your customers' prepayments is essential for maintaining precise financial records, mbecker1313. Let's work together to achieve this in QuickBooks Desktop.

To efficiently manage customer deposits, create an item linked to a liability account to hold these deposits. This ensures the income isn't posted until the prepayment is applied, while your business retains the funds.

Once done creating the item, here's how to record the upfront deposits you received:

1. On the top menu, go to Customers and then Enter Sales Receipts.
2. From the Customer:Job, select the customer or job.
3. If the Deposit To field appears, select the account to deposit the funds. If this field does not appear, the funds are identified as Undeposited Funds and can be deposited later.
4. Choose the Payment method.
5. Fill out the appropriate fields.
6. Select the Upfront Deposit item you created from the Item drop-down list.
7. In the Amount field, enter the amount of the retainer.
8. Hit Save and close.

For more detailed information on setting up, recording, and managing prepayments, please refer to this article: Manage upfront deposits or retainers.

Furthermore, QuickBooks uses Profit and Loss data to create budgets and forecasts. Since prepayments are recorded as liabilities, they won't appear in your budgets/forecasts until the revenue is earned and recorded in your income accounts. That said, you can apply the prepayment through an invoice to move it from the liability account to your income account. The steps to do this are outlined in the article I attached above.

Additionally, you might find this article beneficial for utilizing QuickBooks Desktop's budgeting tools: Create a budget or forecast in QuickBooks Desktop.

As we approach the end of the year, here's a comprehensive checklist to help you close out this year and prepare for the next: Year-end checklist for QuickBooks Desktop.

I appreciate you taking the time to ensure you're recording your customers' prepayments accurately in QuickBooks Desktop. Please don't hesitate to reach out if you need further assistance or have any questions. I'm here to support you every step of the way. Happy holidays!

@mbecker1313 

Assign the prepayments to an Other Current Liability account called 'Deferred Revenue'.  Then, to allocate the amount of the prepayments to the individual month/week, create a journal entry (JE) (Company > Make General Journal Entries).  Let's take an example where you have $100K in prepayments and want to allocate $25K in income for the 4 months of Dec - Mar.  Each month, create a journal entry that looks like this:

The amount allocated to income should post to your budget when you create one.  Be aware that this process is correct from an accounting perspective but may not be correct from a tax perspective.  For example, if you're on cash basis, prepayments are considered income when received.