HVAC Plumbing Electrical Books CleanupA deposit that has not been earned.

Why the bank balance lies.

A deposit feels finished because the cash is real. The job may not be. Progress money, a down payment on a changeout, and the final invoice are three different moments, and only the invoice earns the revenue. Until then the cash is a liability with the customer's name on it, amount aside.

A morning when the trucks stay parked still leaves last month's deposits in the bank. The phone can show every one of those deposits and still hide which job earned them. We know that quiet. It is a bad morning to discover last month's deposits were all called income before any of the tickets said the work was done. The notice is not the invoice, and the bank line is not the job word.

Publication 94-157 is the one that ties the progress bill to the job label. If the contract makes those bills state labor and materials separately, the job is a separated contract even when everyone on the crew thinks of it as one price. The books should follow the contract, not the mood of the week.

What we want the line to say.

Unearned, until an invoice earns it. The job word beside it, so a later month knows whether the earning will be a house, an office, a new build, or maintenance. Sales tax not folded into the revenue on a bill that already split the lines. Those three habits are the whole correction for this page.

Imagine a maintenance visit and a broken commercial unit in one deposit. Neither ticket names the job. The deposit is already in income. No company, no city paired with a dollar, no saved tax. The shape is a composite. If it is your week, the document to send is the deposit that has not been invoiced, amount covered.

We do not net the tax into revenue to make the profit line look familiar. Familiar and wrong is how a lender meeting goes badly. The unearned word is plainer, and it survives the conversation.

What this page will not do.

It will not name a client. It will not print a dollar from a real file. It will not tell you the sales tax on a ticket we have not seen. It will not call a deposit income because the bank already counted it.

A lender who asks for a signed opinion on the statements hears on the first call that this practice does not issue one. The waiting deposit is still our kind of work. The signature is not. Anyone who wants the long version of that limit will find it written once on the disclosures page.