Credit notes for security deposits?

[Maf. King]

On Monday, 18 April 2016 20:06:12 BST trythis wrote:
> I am using the business component to keep track of people that rent out a
> gallery space.
> I am wondering if I can create an invoice for the use of the space including
> the deposit.  We often return the deposit and I was thinking the invoice
> could cover both the rent and deposit together.
> 
> When we return the deposit we could issue a credit note to cover the refund.
> 
> 

Hi,

I don't know about your local tax & legal rules, and I'm not an accountant 
anyway,  but it seems to me that a deposit held against possible future 
default or damage would be a liability to your books.

I think that the deposit isn't your money, it is the client's, you are just 
"looking after it" for them.  You have first dibs to spend it (to cover unpaid 
rent or damages (when it will become your income)), or give it back to them at 
the end of the tenancy period.

Gnucash invoices in the past have not been able to book line items to a 
Liability account - I don't know if that has changed with the modifications to 
recent versions (because I haven't tried to do it!) - which I guess is why 
what you are saying seems like a kludge to me - credit notes would return 
"income" not "liability" IMHO.

I'm not into rentals, so YMMV,  just 0.02 etc.

Maf.