paul22
Hi Paul,
This is a good question, and it really depends on how you're operating - are you a Sole Trader or a Director of a Limited Company? Either way, I'll try to cover both for you below.
Limited company:
There are only two things to really consider here; VAT & Corporation Tax.
VAT in Crunch is based on "Cash Accounting", which means you'll only pay VAT to HMRC once you receive payments. No matter whether you raise one invoice or split them makes no difference in this regard - of course, this is only if you're VAT registered to begin with and are charging VAT on your invoices.
The one that is most likely to affect you, if you do create one invoice with an amount outstanding following into the next year, is that you'll still be charged the full Corporation Tax on the invoice even though you haven't received payment for it yet - this is due to an "Accrual Accounting" system - which is pretty much the opposite of how the "Cash Accounting" system for VAT works.
As you're going to receive the deposit money and job money separately, it's easier to create two different invoices for the client - clearly marked as such, "Deposit" and "Job", for example.
A small side note, if any of the deposit needs to be returned, it'll also make it way easier to manage by simply credit noting & recording a refund against one invoice specific to the deposit, rather than trying to partially credit note and refund a combined invoice of both the deposit and the job.
Sole Trader:
The only way this could impact you is through your Self Assessment.
Let's say the deposit is paid on 6th October 2021, and the job paid on 6th May 2022.
The deposit is paid to you during the 6th April 2020 - 5th April 2021 year, which means you'd need to declare the deposit as income received during this financial year.
The job is paid to you in the following tax year, 6th April 2021 - 5th April 2022, which means you'd need to declare the job as income received during the next financial year instead.
As for the invoice itself, whether you created a single or combined invoice, would make no difference in this regard. You'd just need to be mindful of when you're declaring the income received depending on the tax year it's received in.
I hope this makes sense, do give me a shout if you need more clarity or you have any questions 😃
