By default, Mews accounts for revenue and tax at the time of consumption, i.e., when guests consume your goods or services. To account for tax on a prepayment at the time you receive it, you can use deposits in Mews Operations, a feature that allows you to settle a prepayment and recognize tax before your guest arrives for their stay.

When you use deposits to account for tax on a prepayment, the system records that prepayment as revenue. If you don't want to recognize revenue at the time of payment, you should not count deposits when calculating revenue.

Note:

• For properties in the United States, Australia and New Zealand: Do not select this feature, as you are not legally required to report deposits to pay VAT. The system provides this option for properties legally required to account for tax upon receiving payment, so they do not have to post deposits manually.
• If you want to enable the deposit feature to handle taxes on prepayments, you can switch on the Tax declaration on deposits feature in the Accounting configuration. If you cannot see any deposit options in Mews Operations, click the slider switch on to enable the feature.
  
  In this article you can learn about:
• How deposits work in Mews Operations
  • Positive deposits
  • Negative deposits

How deposits work in Mews Operations

When you receive a prepayment, you can create a new deposit for the same amount as the prepayment and attach the tax rate of your bookable service.

The system creates every deposit with two revenue items:

• one with a positive value and
• one with a negative value

Positive deposits

A positive deposit represents revenue items on the guest's final bill, for example, nights or breakfasts. Mews immediately consumes the positive deposit when you create it. You use it to close a bill that contains a real prepayment.

 

In legal environments that require tax reporting at the time of payment, the positive deposit also applies tax to the prepayment transaction. This mirrors the taxation of the actual bill, so the deposit reflects the correct tax value.

 

Negative deposits

Mews lists a negative deposit under the customer's unpaid items, along with the stay item. It mimics the payment, allowing you to settle the item without accounting for revenue and tax twice.
 

You can learn more about how to post and track deposits in the accounting ledger here.