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deposit - accounting advice

  • 14-07-2008 1:30pm
    #1
    byronyasgur
    Closed Accounts Posts: 5 ✭


    hi - am newish in business for myself - i have accepted a deposit from a customer on a job that i am doing - i would just like someone to point me in the right direction with the accounting of it - i was thinking of just raising 2 seperate invoices - one for the deposit now which i would mark paid and a second for the balance which i would mark paid when i get it - is this the right way to do it - i can imagine about another 2 ways to do it but i dont really know

    also i did hear that there is some thing to be aware of with regard to VAT when accepting deposits - i presume it's just that vat has to be declared/paid on the deposit portion of a payment in the period in which it is received but maybe someone could verify that

    thanks

    i am using sage to do my accounting ( and i am not very knowledgable except for doing a sage course so if you could keep the language simple thanks )


Comments

  • #2
    aidan.connolly
    Registered Users, Registered Users 2 Posts: 250 ✭✭aidan.connolly


    Hi, I agree with your idea of raising two invoices.
    You will have to account for the Vat on the deposit. If you raise just one invoice for the complete job, you will be obliged to account for the vat on the full invoice now, even though you have only been paid for part of it.

    Good luck


  • #3
    mkdon05
    Registered Users, Registered Users 2 Posts: 766 ✭✭✭mkdon05


    aidan.connolly wrote: »
    Hi, I agree with your idea of raising two invoices.
    You will have to account for the Vat on the deposit. If you raise just one invoice for the complete job, you will be obliged to account for the vat on the full invoice now, even though you have only been paid for part of it.

    Good luck

    This is not the case if the OP is using the cash received basis for vat.


  • #4
    aidan.connolly
    Registered Users, Registered Users 2 Posts: 250 ✭✭aidan.connolly


    Hi, Yes you ae correct. My understanding was that if you raise an Vat invoice you are not using the cash receipts method, but I am incorrect .
    I would still however issue two invoices.
    To operate the cash reciepts method you have to be supplying at least 90% of your goods and services to unregistered persons.


  • #5
    mkdon05
    Registered Users, Registered Users 2 Posts: 766 ✭✭✭mkdon05


    aidan.connolly wrote: »
    Hi, Yes you ae correct. My understanding was that if you raise an Vat invoice you are not using the cash receipts method, but I am incorrect .
    I would still however issue two invoices.
    To operate the cash reciepts method you have to be supplying at least 90% of your goods and services to unregistered persons.

    Again this is incorrect, companies with a turnover under €1,000,000 may opt for the cash receipts basis.

    My advice would be to issue one full invoice. When you receive the deposit calculate the vat amount that is inclusive. i.e 300 deposit = 247.93 net and vat of €52.07


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