An upfront deposit or retainer is a liability on your books even though you
deposit the funds into your checking account. You should not record it as
income when you get it.
Note: Law firms might also use
trust accounts to hold client funds.
The difference is that with trust accounts, you must set up a separate bank
account to hold your client's funds. Be sure to always follow the rules of
your state regarding the professional and ethical conduct for handling client
funds. Failure to abide by those rules and practices could result in
administrative, civil, or criminal sanctions.
Create a liability
account for your upfront deposits or retainers.
Create an upfront deposit or
Record the upfront deposit or
retainer as a liability.
Apply the upfront deposit or retainer to an invoice.
(Optional) Handle the upfront deposit or retainer for a cancelled job.
Upfront deposit or retainer
customer retention or retainage