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Your Business Collects Deposits for a Partner’s Services: Establish Whose Revenue and Liability They Are

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Partner service deposits should not automatically be recorded as your company’s sales. First establish who promises the service to the customer, what your business is responsible for and whether it acts as principal or agent. The bank account receiving the money does not answer those questions by itself.

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Follow the customer contract

Collect the booking terms, customer invoice or receipt, partner agreement and refund policy. Identify who the customer can require to deliver the service or repay the deposit. Check whether the website’s description matches the signed arrangements and actual operating process.

For example, a training business takes booking deposits for workshops delivered by another provider. It might be selling its own service with an outsourced trainer, or collecting money for the provider in exchange for a fee. Those arrangements can require different analysis even when the same amount reaches the bank.

Separate accounting and GST questions

Ask the accountant to assess the applicable revenue-recognition framework and whether gross receipts or a fee represent the company’s revenue. Our service-business revenue recognition guide discusses the wider recognition process. Cash collection alone does not establish that all performance is complete.

IRAS’s guidance for sharing-economy participants distinguishes supplying in one’s own name as principal from facilitating another supplier’s sales as agent. Have the tax adviser apply the relevant GST rules to your actual arrangement; an accounting entry is not a substitute for that review.

Build a booking-by-booking reconciliation

Item Record to keep
Customer payment Booking, receipt date and amount collected
Service obligation Supplier, event or delivery date and completion
Your fee Basis, entitlement and any adjustment
Partner settlement Amount payable, deductions and payment evidence
Cancellation Refund responsibility and actual outcome

Do not net unrelated customer refunds against partner payments without an agreed basis and a clear record. Identify fees, GST and unsettled amounts separately so the balance can be explained.

Keep unearned and third-party amounts visible

Review which balances remain liabilities and when they are released. Our deferred revenue and prepayment guide addresses timing, but money collected for another supplier may involve a payable rather than your own deferred sales. The contract and accounting assessment need to support the classification.

If a partner cancels an event, establish who must communicate with customers and who funds the refunds. Having already transferred the deposits to the partner does not by itself resolve your company’s obligations to customers.

What should be agreed before the next launch?

Document the supplier identity, customer communications, deposit handling, commission, refund decisions, settlement frequency and access to booking records. Ask legal advisers to review unclear obligations and the accountant to align the ledger with the completed agreement.

Keep a monthly reconciliation of outstanding bookings and partner balances. Investigate unexplained old deposits rather than recognising them as income merely because nobody has asked about them recently.

For related company questions, see our accounting guides.

Get help with partner deposits and revenue records

For accounting, tax or corporate records support, email [email protected] or WhatsApp +65 8501 7133. Tell us which company is involved, what has happened and the next deadline. We can help organise the records and coordinate the appropriate specialist review.

Kevin Yeo, Raffles Corporate Services

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