Q&A: Partial Security Deposit Payments in QuickBooks

P.J. wrote in asking how to receive security deposit payments over time, such as in a payment plan.

How do I properly track partial security deposit payments (Some of our tenants cannot pay full deposit up front—but might take an additional month to pay in partial payments).

We need a easy way to know at any given time how much they owe. I read how to setup the security deposit in your book—but I am unclear on how to determine how much they owe vs. how much they paid.

I can look at Chart of Accounts and see how much they have paid in Security Deposit—Current Liability account—but I cannot determine how much is remaining—any help would greatly be appreciated.

Great question. Fortunately, after reading other parts of the book you practically know the solution already. You’ll want to create an invoice and invoice the tenant (job) for the security deposit. The key is you need to create an item, just like the Rent Item, but it is a new item to post to this tenant’s security deposit sub-account.

Create the new tenant’s security deposit account:

create security deposit account - partial deposits

security deposit accounts - partial deposits

Create the item to use on the invoice for the security deposit.

quickbooks item for security deposit of a tenant

partial security deposit item lists

Invoice the tenant for the item, as in the rest of the examples in the book. Then go through the book’s normal receiving of payments process as the tenant pays things back. Receive payments as many times as they pay. Choose if you want (and are allowed) to impose finance charges to a late payment.

How much does this tenant still owe in their security deposit?

Look at the Customer center and see the tenant (job’s) current outstanding balance. Or, click Reports > Customers & Receivables > Customer Balance Detail.

If all of this seems complicated, we have a simpler way that works in most cases. Usually security deposits are paid upfront, so we teach a quicker method in our training. Also, we show instructions for combining the first month’s rent with the security deposit. There are many more screenshots (with detailed arrows) in our book than in the abbreviated instructions above.

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Tenants as Customers or Jobs in QuickBooks?

quickbooks tenant customer or job

How do you enter tenants in QB’s?

In our training, we recommend you set your tenants up as Jobs in QuickBooks. Properties are Customers. If you have several tenants that pay separately, you can create multiple Jobs under one property (Customer), and then memorize independent invoices for each of them and ‘receive payments’ for each.

 

Following our recommendation, you gain these benefits:

  • This gives you a significant organizational simplification within your QuickBooks company.
  • Doing it this way makes for automatic, at-a-glance, rent-rolls. You can see vacant properties, overdue tenants, and everything in a “rent roll” at a glance. No report needed.
  • It reminds you of a tenant’s location (which is hard when you have dozens of tenants, and you find yourself thinking of things in term of units/buildings rather than tenant names). You also can search by name or property within the list, as shown below.

In the example below (from our training company file with 12 months of sample real estate transactions) you can see three tenants that share a unit. None of the tenants owe any money, if they did the current amount due would appear in the Balance Total column.

quickbooks tenant as customer or job

If you have a large multiunit apartment building, you have the option of having the Customer as the property, Jobs as each unit, and Sub-Jobs as each tenant. Or, you can suffix (or prefix) each tenant (Job) with the unit they belong in, such as “Lee,Jake[A]”

Read the related article: How to convert a Tenant as a Customer into a Job in QuickBooks.

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