Customer Deposits

by Joerg
(Vancouver, BC, Canada)


We run a small B&B.

If I receive a payment in 2009 for a 2010 booking - do I report the payment as income in 2009 or 2010?

After all the guest could cancel ...


Hi Joerg,

The short answer to your question is no ... customer deposits are not recorded as income ... until you have provided the service or product.

Thanks for asking this question ... because it is a very common bookkeeping error ... so good for you for catching it.

Customer deposits are unearned revenue ... which means they are a liability to you. Sales tax is also affected, because you don't have to pay sales tax until the service or product is delivered either.

I'm going to give you a link on how to handle this type of bookkeeping entry. Read through the whole post ... because you will have two choices ... so pick the method you are most comfortable with.

How to Record and Apply a Customer Deposit

If there is anything you don't understand after you've read through the instructions, post back here and I'll help you out further.

Have a fabulous weekend Joerg! :0)

Comments for Customer Deposits

Click here to add your own comments

Mar 02, 2010
My Two Cents
by: Cathy

I'd say it is a deposit and treat it as accrued revenue. Until you provide the service it is not income. That's my 2 cents..

Editor's note: This reply was originally posted in facebook.

Click here to add your own comments

Return to Small Business Bookkeeping.

Share this page:
Enjoy this page? Please pay it forward. Here's how...

Would you prefer to share this page with others by linking to it?

  1. Click on the HTML link code below.
  2. Copy and paste it, adding a note of your own, into your blog, a Web page, forums, a blog comment, your Facebook account, or anywhere that someone would find this page valuable.

Enjoy A Tea Break With
Me Today. Let's Chat!

Use the search feature to quickly find the
information you're looking for.

Your Learning Curve!


Warm up your tea cup and check out these chats ...

Click on image above to read the chat.

Join Me On Facebook

Help support this site by "liking" me! Here's where I post current information.

Listed Under Websites NOT Local Business.
This website is NOT associated with the business operating in Bonnyville AB.

A Handy Reference