I have a service company and am trying to find the best way to record deposits and payments. I require deposits for large projects in order to purchase the materials.

Hi, there thank you for posting here in the Community, @vcastorena2014.

To record a deposit you can set up a deposit or retainer process for your company in QuickBooks Online. This treated as a liability. When you invoice the customer and receive payment, you'll turn that liability into income.

First, you need to create a liability account to track the amount of the retainers you receive from your customers.

1. Go to Settings ⚙, then choose Chart of Accounts and click New.
2. In the Account Type ▼ drop-down menu, click Other Current Liabilities.
3. In the Detail Type ▼ drop-down menu, Trust Accounts - Liabilities.
4. Type a name for the account (ex. Trust Liabilities) or accept the suggested name.
5. Choose an option from the When do you want to start tracking your finances from the is account in QuickBooks? dropdown list.
6. Click Save and close.

Once done, you can turn the retainer or deposit you previously received into credit on an invoice and receive it like a payment.

1. Create an invoice for your customer that lists the services or goods you provided.
2. On the last line of the invoice, in the Product/Service field, select the Retainer or Deposit item.
3. Enter the retainer Amount as a negative to subtract it from the invoice. You cannot enter a retainer amount greater than the invoice total. An invoice can have a zero total, but not a negative one.
4. Select Save and close.

For more details to create a retainer item and to invoice the customers for deposit or retainers, please refer to this article link: https://quickbooks.intuit.com/learn-support/en-us/business-accounts/record-a-retainer-or-deposit/00/185566.

You can review retainers or deposits by customers on the Balance Sheet report. Here's how:

1. Go to the Reports menu and choose Balance Sheet.
2. In the Report period ▼ drop-down menu, click All Dates. Then Run report.
3. In the Liabilities section, find your trust liability account.
4. Choose the amount shown for the account to open the Transaction Report for that account.
5. Click Customize.
6. Once on the Customize report panel, select Rows/Columns.
7. From the Group by ▼ drop-down menu, select Customer.
8. Click Run report.

Feel free to post a comment below if you have other concerns with QuickBooks. I'm always here to help. Have a great day!

@vcastorena2014 

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