Deposit

Deposit is money a customer pays upfront to secure goods or services. In a small business it helps confirm a booking, start work, or cover potential loss. A deposit can be a part of the price, or a sum held as security.

How you account for a deposit depends on its purpose. A part‑payment is usually deducted from the final invoice. A security deposit is held and returned if no issue arises; if you keep it, it becomes income. On your documents, state clearly what the deposit is for and the conditions for refund or deduction.

Know the difference between common deposit types:

• Advance/part‑payment: taken before the sale is completed; shown on the invoice and deducted from the final amount; usually follows the same tax treatment as the sale.
• Refundable security deposit: held to cover damage or non‑payment; recorded as a liability, not revenue; if retained, treat it as income and tax may apply when it is kept.