Bank Statement to QuickBooks for Interior Designers: Convert PDF Statements to QBO

When a client wires you a retainer or writes a deposit check before you have designed a single room, that money is not yours yet. It sits on your books as unearned revenue (a liability), and you recognize it as income in two separate pieces as the underlying obligations are satisfied: the design-fee portion as you actually perform the work, and the product portion when the furniture or fixtures are delivered to the client. Say a client sends a $10,000 retainer against a project with an estimated $4,000 in design fees and $6,000 in furniture. You book the full $10,000 to a client retainers liability account when it hits the bank. As you bill design-fee hours or milestones, you move the matching amount out of the liability and into design-fee income. When the sofa and side tables ship and are accepted, you move the product portion out of the liability and into product income, with the trade cost recognized as cost of goods sold at the same time. Until goods are delivered or hours are worked, the cash is still the client's, not yours, and your balance sheet should say so.

Most designers buy fabric, lighting, rugs, and case goods from trade-only vendors at a net or wholesale price, then resell those same pieces to the client at a retail markup. How you report that markup on your books, and on your income statement, depends on a specific question under current revenue-recognition guidance (ASC 606): do you control the item before it reaches the client, or are you merely arranging a purchase on the client's behalf for a fee?

If you take title to the goods, carry the risk if they arrive damaged or the client rejects them, and set your own resale price, you are acting as a principal. That means you report the full retail price as product income and the trade cost as cost of goods sold, so your revenue shows the gross sale and your gross margin shows the spread. If instead you are simply placing an order in the client's name, never take on inventory risk, and are paid a fixed fee or commission for arranging it, you look more like an agent, and you would report only your margin or commission as income, not the full retail price. This distinction can change your reported revenue by a large multiple without changing your actual profit at all, which is exactly why it matters for loan applications, valuations, and comparing year over year. It is a facts-and-circumstances call that your CPA should make and document, not something to guess at from a bank feed.

Trade vendors routinely require 50 percent (or more) down before they will cut fabric or build a custom piece. When that deposit leaves your account, it is not an expense on the day you pay it. It is a prepaid deposit, an asset sitting on your balance sheet (some firms track it as job-specific work in process), because you have not yet received the goods and the client has not yet been billed for that item. The cost only moves to cost of goods sold when the item is delivered and you recognize the matching sale. Coding vendor deposits straight to an expense account the moment they clear the bank understates your assets, overstates your expenses in the deposit month, and then leaves a mystery when the final invoice comes in with no offsetting cost to match against it.

Set up at least three income accounts: design-fee income (hourly, flat-fee, or per-room), product income (the retail side of FF&E you resell), and reimbursable expenses (costs you pass through to the client). These behave differently and blending them hides where your money actually comes from. Design fees are close to pure margin once you cover your own time. Product income carries a real cost of goods sold, so its margin depends entirely on your markup and freight. Reimbursables billed at exact cost are a wash on your income statement, a pass-through with no margin, while reimbursables marked up even slightly do carry margin and belong closer to product income than to a zero-margin pass-through account. A firm that lumps all three together can look highly profitable on total revenue while actually losing money on the furniture side, or the reverse.

Inbound freight on an item you are reselling, the charge to get a chair from the manufacturer's dock to your warehouse or the client's home, is part of that item's cost, not a standalone shipping expense. Roll it into cost of goods sold alongside the trade price so your product margin reflects the real, landed cost of the piece. White-glove delivery and receiving fees you bill separately to the client, on the other hand, can sit in their own income line if you are marking them up, or flow through as a reimbursable pass-through if you are billing them at cost.

Upholsterers, workrooms, installers, and other subcontracted labor you bring onto a project are usually 1099 contractors rather than employees, and classification follows the IRS's control test: who directs how, when, and with what tools the work gets done, not just how the invoice is worded. For payments made on or after January 1, 2026, a business only needs to issue a Form 1099-NEC to a contractor once payments to that contractor reach $2,000 in the calendar year, and that threshold is indexed for inflation in future years. That is a real change from the reporting rule most designers grew up with, so update your bookkeeping checklist and your vendor W-9 collection process accordingly. Close calls on employee versus contractor status are worth a CPA's sign-off before you build a habit around them.

Because you are reselling tangible goods, most states let you buy FF&E from trade vendors tax-free using a resale certificate, then require you to collect sales tax from your client as the retailer when you sell the piece at retail. Holding that certificate is a two-way obligation: it exempts your wholesale purchase, but it also puts the burden on you to charge and remit tax on the resale, and using it to buy anything not genuinely intended for resale is a compliance problem waiting to surface in an audit. Rules on what is taxable (goods versus pure design-fee services), registration, and filing frequency vary by state, and some states tax design services differently depending on whether they are bundled with a sale of goods. Confirm your state's specific treatment with a CPA or your state's revenue department rather than assuming it matches a colleague's state.

How do I record a client deposit in QuickBooks?

Record it as a credit to a client retainers or unearned revenue liability account, not as income, the day it clears the bank. Then move the design-fee portion to design-fee income as you perform the work and the product portion to product income once the related goods are delivered, so you never report revenue you have not actually earned.

Do interior designers report the full retail price of furniture as revenue?

Only if you are acting as a principal under ASC 606, meaning you took control of the goods, carried the delivery and acceptance risk, and set the resale price. If you were purely arranging the purchase for a fixed fee with no inventory risk, you report only your commission or markup, not the full retail price. This is a facts-based determination a CPA should confirm.

Are vendor deposits an expense in QuickBooks?

No, a deposit you pay a trade vendor to place a custom order is a prepaid asset, not an expense, because you have not yet received the goods. It converts to cost of goods sold only when the item is delivered and you recognize the matching sale to your client.

How do I import a bank statement into QuickBooks?