How do I handle client deposits for a video production company?
When a client pays a deposit for a video project, that money is not revenue yet. It goes on your balance sheet as a liability, typically called “unearned revenue” or “deferred revenue.” This might feel counterintuitive because the cash is sitting in your bank account, but you haven’t earned it until you deliver the work.
Here is how it works in practice. Say a client pays you $5,000 upfront for a $10,000 video project. You record that $5,000 as a debit to your bank account and a credit to an unearned revenue liability account. Your income statement stays untouched at this point. No revenue shows up, because none has been earned.
As you complete the project or hit agreed-upon milestones, you move money from that unearned revenue account into actual revenue. If you deliver the final video and invoice the remaining $5,000, the full $10,000 now shows as earned revenue and the liability account goes back to zero. For longer projects with defined phases like scripting, filming, and editing, you can recognize revenue at each milestone instead of waiting until the very end.
Getting this wrong creates real problems. If you record deposits as revenue the moment they hit your bank account, your income statement will overstate how much you’ve actually earned. That inflated number affects everything from your tax liability to how you evaluate whether you can afford new gear or another hire. You could also end up paying taxes on money tied to work you haven’t done yet, and if a project falls through and you have to refund the deposit, unwinding that gets messy.
In QuickBooks, set up a liability account specifically for client deposits or unearned revenue. When a deposit comes in, record it there. When you complete the work and send the final invoice, apply the deposit and the software moves it into revenue for you. It takes a few extra steps compared to just dumping everything into income, but the payoff is accurate books that reflect reality.
Creative service businesses like video production studios deal with this constantly because project-based work almost always involves upfront payments. The deposit structure protects both you and your client, but only if the accounting matches the actual flow of work.
If your books currently show deposits as income and you’re not sure how far off things are, a Dodge County bookkeeper familiar with project-based businesses can help you restructure your chart of accounts and clean up past transactions so your financials tell the true story going forward.
Wisconsin's Small Business Bookkeeper
The Next Step:
A Quick Conversation
Tell us about your business. We'll talk through what you need, answer your questions, and give you a clear quote.
More Questions
How often do I file Wisconsin sales tax returns?
The Wisconsin Department of Revenue assigns your filing frequency based on how much sales tax you collect. You'll file monthly, quarterly, or annually. Even periods with zero sales require a return.
Read answerWhat Wisconsin sales tax applies to restaurant sales?
Wisconsin restaurants collect 5% state sales tax plus 0.5% county tax in most counties, bringing the total to 5.5% on prepared food and beverages. A few jurisdictions add additional local taxes for stadium or exposition districts.
Read answerHow do boutiques account for inventory markdowns and sales?
When you sell marked-down inventory, the sale records at the reduced price while cost of goods sold reflects what you originally paid. Your gross margin compresses naturally. For clearance items sold below cost, you may need to write inventory value down.
Read answerWhat photography equipment can be expensed vs depreciated?
Items costing $2,500 or less can be fully expensed under the de minimis safe harbor. Above that threshold, equipment is typically depreciated over five years unless you elect Section 179 to deduct the full cost in year one.
Read answerHow do residential cleaners handle customer deposits?
Customer deposits are liabilities, not revenue. Record them in an unearned revenue account when you collect the money, then move the amount to revenue only after the cleaning is completed.
Read answerHow do I track recurring cleaning contracts in QuickBooks?
Use recurring invoices for each contract and set up classes or customer types to separate monthly contract revenue from one-time jobs. This gives you a clear view of your monthly recurring revenue.
Read answer
