how to track holdback

I've got you covered, Sharon. To track holdbacks, let's start by creating a liability account in the Chart of accounts. This way, we can monitor the amounts received and associate them with invoices or sales receipts in QuickBooks Online (QBO). I'd be glad to show you how:

1. Navigate to the Gear icon, then Chart of accounts.
2. Click New account.
3. Input an Account name (e.g., Trust Liabilities) or accept the suggested name.
4. Select Other Current Liabilities as the Account type.
5. For the Detail type section, pick Trust Accounts - Liabilities.
6. Choose a Default Tax Code, enter an Unpaid balance, and specify the As of date.
7. Hit Save.
   

Next, we’ll create a retainer item that we'll use when generating an invoice or sales receipt to record a deposit or retainer payment.

1. Go to Settings, then Products and services.
2. Press the New button, then Service.
3. Write a name for the new item (for example, Retainer).
4. From the Income account dropdown menu, select the liability account created in Step 1.
5. Tap Save and close.
   
   

After that, we’ll proceed to step 3, which applies if you hold customer retainers and deposit funds in a separate trust account. In this step, you’ll want to set the Account type to Bank, choose Trust Account as the Detail Type, and provide a name for the account (e.g., Trust Liability Bank Account). Additionally, decide on a Default Tax Code, key in the starting Balance, and specify the as of date.

Otherwise, we can skip that part and proceed directly to creating a sales receipt or generating an invoice for the deposit or retainer.

1. Select + Create, then Invoice.
2. Pick the Customer name from the dropdown list.
3. In the Product/Service column, opt for the Retainer or Deposit item you set up.
4. Record the amount received for the retainer or deposit in the Rate or Amount column.
5. Once done, Save and close.
   
   

Please note that cash basis reports will not reflect the deposit/retainer as received until the invoice is paid in full. I recommend consulting with your accountant to explore a workaround that includes a journal entry. For more information or to proceed to step 5, visit this article: Record a retainer or deposit in QuickBooks.

I hope these steps make it easier for you to track holdbacks and retainers in QBO. If you need further assistance or have questions, please don’t hesitate to click the Reply button below. I’m here to help and guide you every step of the way. Take care.