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mnr1
Level 1

Entering contractor's invoice that includes release of retention monies

How do I enter retention claimed on a contractor's invoice? This retention is in relation to the monies retained by us, as the developer, from the contractor during work in progress stage. At practical completion of the construction the contractor requests release of retention monies.

1 REPLY 1
Angelyn_T
QuickBooks Team

Entering contractor's invoice that includes release of retention monies

I'm here to help you with tracking retention claimed on your contractor's invoice, @mnr1.

 

First, you need to create a retainage account for tracking the amount. Then, create an item so you can use it on your invoices.

 

To create a retainage account:

 

  1. Click on Accounting at the left pane, then tap on Chart of Accounts.
  2. In the Chart of Accounts window, click New.
  3. For Category Type, select Other Current Assets.
  4. Choose Retainage under Detail Type.
  5. For the Name, enter Retainage Receivable.
  6. Save the account.

 

And, here's how you can set up a retainage item:

 

  1. Tap on Products and Services from the Gear icon.
  2. Click on the New tab.
  3. Choose the Service or Non-inventory type.
  4. Enter a Name for the item (Retainage).
  5. Under Sales Information, place a check-mark next to I sell this product/service to my customers.
  6. Select the Retainage Receivable account (the account you've set up) from the Income Account drop-down.
  7. Hit Save.

 

Once done, you're now ready to enter the retention amount on the invoice:

 

  1. Go to the +New icon, then click on Invoice under Customers.
  2. Select your customer or contractor's name.
  3. Fill out the remaining fields of the invoice, including the purchased line items.
  4. On the next available line of the invoice, select Retainage from the Product/Service column.
  5. In the Rate column, enter the amount of the retainage as a negative (-) number. If your retainage is a percentage, you must calculate this manually.
  6. Tap on Save and Close.

 

Aside from these steps, you can also connect with your accountant for further assistance. He or she can also give you other alternatives to record the retention amount in QuickBooks Online (QBO).

 

On the other hand, you can review the topics from this link for more tips about tracking retainers or deposits: Learn how to record a retainer or deposit in QuickBooks Online.

 

You can also keep track of your income and other customer transactions through this link: Topics about your company's income and customers.

 

If you have any other follow-up questions about tracking retention amounts on invoices, please let me know by adding a comment below. I'm more than happy to help. Keep safe!

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