Handling security deposits
Hi! I've been struggling with handling security deposits through Wave. I browsed topics about this and realise that it isn't actually built in Wave to do that. But perhaps someone has an idea for a workaround that suits my needs.
We rent out rehearsal spaces for bands and hence require a security deposit from them. Since we also have two months notice period for cancelling, we often say that those last two months are covered by deposit so they don't have to pay the rent in that time and we don't need to pay back the deposit. If I create a separate category called "security deposit" to count the deposit as a liability, how could I then make it all turn out correct in the end when we consider a part of the deposit or the total sum of it as rent?
Thank you in advance for any advice.
Comments
Hi @Tapetown, the workaround will depend on if you want the deposit to show up on the invoice.
I would like to record security deposits owed by my tenants, just like I can record rent owed. Ideally, my workflow would be: when a new 12-month lease is signed, immediately set up the system with a recurring monthly invoice for rent owed and a one-time invoice for security deposit owed. I am already doing this for rent owed and it's working great!
My issue is, invoices seem to require a "product or service" which then gets assigned to an income or sales account so when that invoice gets paid, the transaction is recorded as income. This works well for rent but not security deposits (per my consulation with a Wave accountant, security deposits received go into a liability account under "Customer Prepayments and Customer Credits").
To be clear, I would really like to do this via invoices. It's a huge time saver to be able to see all unpaid invoices in one place. If I had to do some kind of a workaround, and, say, pull up a separate report to see security deposits currently owed, it would kind of defeat the purpose, then I would probably just save this info in a text file and look it up "manually".
Thanks for any help or ideas!
Hi @olingerrentals . I've merged your thread into this one to get some further context on what is possible when recording security deposits. I'm afraid you are correct and a product/service must be associated to an income account specifically. Erik's steps above should help you make the best decision on how to handle this for your business though.
I take a security deposit that is refunded after my client's event. I have been invoicing for the security deposit ($100) and then issuing a refund after their event. Am I doing this correctly? Will that mess up my accounting? Will it look like income? Is there a better way to handle this?
Hey @Ctaber81 , I've merged your comment into this thread for more context. How you're handling it now would be considering the original down payment to be income. This isn't necessarily incorrect, it just may not be how you want to handle it. Erik's response above will offer you some further direction on your different options.