Membership Revenue Deferral is not as critical as Team, Class or Camp Revenue deferrals. Simply because in the event your business did not continue, you would not refund the membership. Most facilities have a non-refundable membership as it is.
However, according to Generally Accepted Accounting Principals, you should defer membership revenue and recognize the revenue over the term of the membership. This means if you have a 12 month membership which costs the customer $36, you should recognize $3 each month and leave a balance in your Deferred Membership Revenue liability account on your balance sheet.
The best way to accomplish this is to group membership sales by month and make one entry for each month. Most accounting systems allow for recurring entries, which makes this process very simple. To do this, follow these procedures:
- Book membership sales to the Deferred Membership Revenue account when recording your GL Report entry each month
- Total the membership sales for the month, grouping by membership term.
- Divide each group by the number of months in the term of the membership
- Record the monthly amount as revenue for the current month
- Have the monthly entry automatically recur each month in the term of the membership