How to Ask Clients for a Deposit

"Ask for half up front" is advice you'll find on almost every freelancing blog. We looked for the research behind it and found none: no study shows that 50%, or any other share, works best. What does exist is firmer ground: rules that cap deposits for some kinds of work, rules on when you can keep one, and tax rules on when a deposit counts as income. Here's how to ask, how much, and what to put in writing.

Why Take a Deposit at All

Waiting to be paid is expensive. UK government research puts the cost of late payment at £11 billion a year to the UK economy. In the Federal Reserve's 2026 small business survey report, half of employer firms named uneven cash flow, which includes collecting what customers owe, as a financial challenge. A deposit shares that risk: the client commits money before you commit time, and you're paid for the work you do first.

How Much to Ask For

We found no law that caps deposits for work between businesses in the US, UK, Canada or Australia. Advice online usually suggests a quarter to a half. Size yours instead to what you'll spend, in time and costs, before the next payment is due, and split long projects into milestones.

Work for consumers is different, especially work on someone's home. A few examples:

• California: a home improvement contractor can take $1,000 or 10% of the contract, whichever is less.
• Maryland: no more than one-third of a home improvement contract.
• Australia: for residential building, 10% in New South Wales, and 10%, or 5% from $20,000, in Victoria.
• United Kingdom: no fixed cap, but the Competition and Markets Authority says a genuine consumer deposit will not normally be more than a small percentage of the price.

Refundable or Not

Say which, before the client pays. In the UK, the CMA's guidance on unfair terms says a business may keep a genuine deposit when it was a clear, disclosed reservation, but a term making a large prepayment entirely non-refundable is likely to be unfair, and anything kept should reflect what the business actually lost. In the US, the closest guidance comes from lawyers' fees: New York's highest court held that special non-refundable retainers clash with public policy (Matter of Cooperman, 1994), and the American Bar Association treats advance fees as earned as the work is done. Those rules bind lawyers, not freelancers, but they show how courts think: a deposit is a payment toward work, and keeping it needs a reason.

When a Deposit Counts for Tax

• US: on the cash method, income counts in the year you receive it, deposits included. Accrual businesses can defer the unearned part of an advance payment to the next tax year, but no further.
• UK: a deposit for a supply creates a VAT tax point when you invoice it or receive it, whichever happens first.
• Canada: a deposit isn't treated as payment for GST/HST until you apply it to the bill; a straight part-payment is.

This is general information, not tax or legal advice.

What to Put in Writing

New York's Freelance Isn't Free Act is a good checklist anywhere. A written freelance contract there must name both parties, itemize the work and its value, and say how and when you'll be paid. For a deposit, add:

• the amount, and what it secures (your time on their dates, materials you'll buy);
• when the rest is due, and how the deposit comes off the final invoice;
• what happens to it if the client cancels.

Put the deposit in your estimate or quote, so it's agreed with the price rather than raised afterward, and set clear payment terms for the balance.

What BillGrid Does Today

Once a client approves your estimate online, send the deposit as an invoice of its own. With Stripe connected, the client pays it by card from the email. Or keep money paid up front as the client's retainer: add it from the Retainer card on the client's page, and apply it when you record a payment on a later invoice. A payment you record for more than an invoice's balance goes into the retainer too. The help article on payments and retainers shows each step.

Where We Think the Product Should Go Next

• A deposit on the estimate. Today approval and the deposit are two steps; a client could approve and pay in one.
• Deposits that apply themselves. A deposit paid online could land in the retainer and come off the final invoice without being recorded by hand.