Manage Taxes and Deposit Costs

Are deposits taxable?
 

Deposits may be taxable or non-taxable. Generally:

• if deposits are non-refundable, they are taxable and you must record the transactions using sales ledger accounts; 
• if deposits are refundable, they are non-taxable and you must record the transactions using liability ledger accounts. In this case, since they are considered loans to customers, you may want to exclude them from sales reports.

Is there a cost price for deposits on tire sales?

No. There is no cost price for deposits on tire sales, whether taxable or non-taxable.

Cost for Deposits on Labor and Canceled Parts

A) The Deposit is not yet a Refundable Transaction

If the deposit has not yet been processed as a refundable transaction, follow the instructions below.

1. In the Point of Sale, on an estimate, first add a DEP product (refundable and non-taxable deposit) with a negative quantity (-1) .

2. Then add a DNR (non-refundable and taxable deposit) product.

3. The rest of the procedure is the same as for deposits for stock and labor. Therefore, proceed to C).

Note: After 12 months, you should convert unused deposits to refundable transactions.

B) The Deposit is a Refundable Transaction

When deposits have been treated as refundable transactions, you must manage them exactly as if they were deposits for inventory and labor. Therefore, go to C).

C) Deposits on Inventory and Labor

To manage deposits for inventory and labor, follow the instructions below.

1. Create a Cost payment method for deposits associated with a general ledger code number in the same series as the Cost of Goods Sold account.

2. Transfer the work order to a Non-Taxable Internal Garage customer.

3. Pay the invoice using the Cost payment method for deposits.