QB Issue Resolution:

“there is a bank option that holds money in trust, which is a contra asset”

The Trust Bank is a Bank type = an Asset. The Liability account is a Liability type. Neither is “contra-” in function or balance.

 

No matter which QB product you are using, it is best to understand that Security Deposits are in the Name of that tenant; that = using Customer transaction for the Receipt of the security deposit. Your item (service) links to the Liability account, and you list this on the Sales Receipt for the payment to you of that security deposit. This gets deposited to Trust Bank.

 

The Custom reporting should show you that Trust Bank amounts by name = liability account balance by name. That also helps you understand that anything in and out of Trust Bank should reference Liability. Here are some example activities:

 

The tenant is moving out and you are paying them their security deposit. You enter a check and use that Service item, on the Trust Bank check. That removes this amount for this name from trust bank and trust liability = it still is in balance by name.

 

Or, they are leaving owing some damage or final rent. This might even be a month with multiple tenants moving out. You write one check from Trust bank to the firm, and on it list that Liability item multiple times, allocating per tenant, for the amounts you need to “pretend it came through the mail” and then you Process the amounts as Receive Payment against the final rent invoice, damage invoice, etc.

 

If there is a remaining balance owed from the security deposit (liability = trust bank) to the tenant, you can write a check to them, or use the Credit Memo method (return process) to list the Security deposit item here, and issue the Trust Refund check from here, as well.

 

The final task is to Manage trust bank = trust liability. Trust Banka is managed by bank statements. Trust Liability is managed by Customer Names. Create a custom report on that account to total or group by name. That way, you see when a name is 0. You reconciled that account to an ending balance of 0, clearing only the activities for the name(s) that is at 0. You then can filter on Cleared Status = No, to see Current balances, or no filter on Cleared Status, to see All activities. These are useful, if you get Audited.

Resolution for Issue 'Recording a security deposit' available: Yes (Solved).
Source: Intuit Community forum.

Recording a security deposit: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.

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