This is the single most common bookkeeping mistake in small rental businesses, and it hurts in
two directions.
A security deposit is not income. It is your customer's money that you are holding. If you
record a ₱5,000 deposit in the same column as a ₱5,000 rental fee:
- Your revenue looks higher than it is, and you make decisions on a number that is wrong.
- When the customer asks for the deposit back, it has already been counted as earnings and
possibly spent.
- If you keep part of it for damage, you have no record of the split.
Track deposits in their own place, with their own status: held, partly refunded,
fully refunded. The amount you kept for damage becomes income at the point you keep it, and
not before.
