Deposit field on Invoice is below the total field. It does not compute sales tax on deposit (acts more like pre-payment) field in QBO. If you run the Sales Tax Liability report from the Sales Tax Center (View sales tax liability report under Related Tasks at the far right side). Just click the tax amount. It will take you to the Transaction Report. You can run this report on a cash basis, you will not see sales tax amount on that deposit or the taxable amount on that invoice total. Of course, on an accrual basis, you will see sales tax amount on the whole taxable sales invoice amount.
In this example, refer to invoice #15-00334 with $100 deposit. No tax amount on a cash basis. Only tax amount on an accrual basis. That is the way it’s supposed to be.
Case: A customer bought $105.00 worth of product and paid $80.00 in cash. You need to send an invoice to the customer for the balance. How would you handle this in QBO?
First, create a new invoice using product/service item code for $105.00. Use deposit field to post $80.00 as the prepayment on that invoice. Deposit field is located right below the total. Now, the invoice will show $25 balance due.
If you do not see “DEPOSIT” field on your invoice, go to “Company Gear” settings to enable deposit field: Gear icon (upper right corner) > Settings > Company Settings > Sales > Deposit > ON > save. See screenshot below for reference.
Click on the screenshots below to enlarge them
Once you enter deposit amount, your invoice screen will expand to show the following three fields added to the invoice form. Fill out the information appropriately:
a) Payment method
b) Reference no.
c) Deposit to
You will need to select “Deposit to” field depending on your situation. If you are depositing this deposit (prepayment) to the bank along with other payments as a batch deposit, then you should select Undeposited Funds Account. On the other hand, if you are depositing just $80.00 as a single deposit to the bank, you should select the appropriate bank account.
The snapshot below shows what accounts are affected by this transaction:
1. Accounts Receivable: $25
2. Sales Income: $105
3. Undeposited Funds or Bank Account: $80