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ADSBro
Level 1

How to properly record payments made in advance

My wife has started an Interior design business. She receives payments in advance to purchasing the furniture etc. How do I record this as there is no invoice at that point to apply against.

Solved
Best answer May 03, 2024

Best Answers
MJoy_D
Moderator

How to properly record payments made in advance

Hello, @ADSBro

 

I can share some information that can help you with recording payments made in advance. 

 

You can record it in QuickBooks Desktop as upfront deposits or retainers. Then, you can apply this deposit to your invoices. 

 

To create a liability account:

 

  1. Go to the Lists menu and click on Chart of Accounts.
  2. Click on New from the pop-up menu.
  3. Select Other Current Liability as the Account Type.
  4. Set an account name and click on OK once you're done

 

To create an upfront deposit item:

 

  1. Go to the Lists menu and click on Item List.
  2. In the Item List window, right-click and select New from the pop-up menu.
  3. From the Type dropdown menu, select the purpose of the deposits you collect.
  4. You can select Service if you collect upfront deposits for services, or Other Charge if you collect upfront deposits for products.
  5. Set a name.
  6. Select the Upfront Deposit liability account you created from the Account drop-down list.
  7. Click on OK.

 

Here's how to record upfront deposits or retainers you receive: 

 

  1. From the Customers menu, select Enter Sales Receipts.
  2. From the Customer:Job drop-down list, select the customer or job.
  3. If the Deposit To field appears, select the account into which to deposit the funds.
  4. Enter all the information needed.
  5. Click on Save and close.

 

For detailed guidance with setting up, recording, and managing upfront deposits, check out this article: Manage upfront deposits or retainers

 

See this article on how to receive payments you receive from your customers in QuickBooks Desktop: Record an invoice payment

 

Let me know if you have further questions about recording payments made in advance. I'm always here to help. Have a great rest of the day!

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1 Comment 1
MJoy_D
Moderator

How to properly record payments made in advance

Hello, @ADSBro

 

I can share some information that can help you with recording payments made in advance. 

 

You can record it in QuickBooks Desktop as upfront deposits or retainers. Then, you can apply this deposit to your invoices. 

 

To create a liability account:

 

  1. Go to the Lists menu and click on Chart of Accounts.
  2. Click on New from the pop-up menu.
  3. Select Other Current Liability as the Account Type.
  4. Set an account name and click on OK once you're done

 

To create an upfront deposit item:

 

  1. Go to the Lists menu and click on Item List.
  2. In the Item List window, right-click and select New from the pop-up menu.
  3. From the Type dropdown menu, select the purpose of the deposits you collect.
  4. You can select Service if you collect upfront deposits for services, or Other Charge if you collect upfront deposits for products.
  5. Set a name.
  6. Select the Upfront Deposit liability account you created from the Account drop-down list.
  7. Click on OK.

 

Here's how to record upfront deposits or retainers you receive: 

 

  1. From the Customers menu, select Enter Sales Receipts.
  2. From the Customer:Job drop-down list, select the customer or job.
  3. If the Deposit To field appears, select the account into which to deposit the funds.
  4. Enter all the information needed.
  5. Click on Save and close.

 

For detailed guidance with setting up, recording, and managing upfront deposits, check out this article: Manage upfront deposits or retainers

 

See this article on how to receive payments you receive from your customers in QuickBooks Desktop: Record an invoice payment

 

Let me know if you have further questions about recording payments made in advance. I'm always here to help. Have a great rest of the day!

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