Did you have to pay a deposit when entering into an agreement? An amount that you pay (or receive, depending on the situation, of course) and that – if all goes well – you also get fully refunded afterwards. How should you stop paying or receiving on such a deposit in your accounts?
No impact on your accounts
Attention, we are only talking about sole proprietors here! Within the context of a sole proprietor, paying a deposit has no impact on your accounts. The money is (temporarily) from your bank account, but you do not have to record the payment as a cost in accounts.
Are you the one who receives on the deposit? The same applies here, there is no impact on your accounts. So you don’t have to record the deposit received on it as revenue.
Why?
Because paying a deposit is something temporary, as you will get that money back later (if all goes well). So you don’t have to record anything for it in your sole proprietors’ accounts, which makes things just that little bit easier!
The same obviously applies to a received on deposit. Here, too, you receive money (temporarily), but have to pay it back later. So no impact on the accounts.
Unless something does go wrong
Only if the deposit is not (or not fully) paid back does this deposit (or part of it) actually become a cost for your accounts. This is because then the deposit is no longer a temporary transaction, but you have lost (part of) the money permanently.
The same counts in the opposite direction. Have you received a security deposit, but due to circumstances you are not going to return it (in full) to the counterparty. Then the deposit becomes income that you have to process in your accounts.
How to process it in Dexxter?
You can proceed on the basis of a document showing that you have lost the deposit (in full or in part). This does not have to be an invoice, but can be any document from the counterparty. You may enter this as an ordinary purchase.
The amount that you then definitively lose in warranty may be entered under the cost category ‘various costs’. There is no VAT impact on this lost guarantee. Entrepreneurs subject to VAT may tick ‘include in vAT declaration’ and fill in the same amount under exclusive and inclusive VAT.
Are you the party who contents the guarantee? Then you may enter the guarantee as an income for the part of the guarantee you deduct via ‘reports’ > ‘income and expenses’ > ‘manual input’ (top right of the screen). This can be done by selecting ‘income – sales invoices’.
As an entrepreneur subject to VAT, you may not include this deposit on a sales invoice in Dexxter! Otherwise, this will also be via the vAT declaration, which is not the intention.
