How to record Advance payment to vendor

@Charles284 

It depends on a number of factors.  Are you on cash or accrual basis?  Are you asking from a tax perspective or just how to record it in QB?  Is the amount significant?  Did you pay the entire amount or is this a deposit?

I appreciate you posting your concern here in the forum, @Charles284.

I'll ensure you can record your advance payment accordingly in QuickBooks Online.

Using the Expense feature, you can record the advance payment for your vendor and set it as an Accounts Payable.

Here's how:

1. Head to the +New button.
2. Choose the Expense option.
3. Pick a Payee and Payment account.
4. Proceed to the Category details section.
5. Pick Accounts Payable (A/P) under the Category column.
6. Indicate that it's an advance payment in the Description column.
7. Enter the amount in the Amount column.
8. Once done, select Save and close.

For more information about managing your expense transactions and creating further changes, please visit this page: Enter and manage expenses in QuickBooks Online.

Moreover, consider running and customizing a report to have an overview of how your business is doing financially. This will help you make informed decisions to ensure your business is on the right track.

Keep us posted if you have additional questions about recording vendor payments or other related concerns in QuickBooks Online. We're here to help.

This does NOT work.

I'm trying to use these instructions to enter an advance payment to a vendor ;  however, to enter to an EXPENSE you have to select a Tax Rate, and you will also get an error that states ' you cannot track tax on accounts type Accounts Receivable and Accounts Payable

I've entered it as a Journal Entry

Debit Accounts Payable account, and choose the vendor under ' Name" 

The credit bank account.

Credit amount is now sitting on Vendor to be applied against Invoice when the goods are received.

Thank you for support

If I record this as an expense and the ordered inventory item arrives, how do I reconcile the bill payment with this advance payment I recorded as an expense?

When recording the transaction as an Expense, ensure that it is associated with the Accounts Payable account, J28. I can provide you with some guidance on this.

The Accounts Payable account is crucial as it impacts the balances of both bills and vendor profiles. This allows us to use it for payment when the actual bill is received. Here are the steps to create an advance payment:

1. Click the + New button and select Expense.
2. Enter the vendor name in the Payee field.
3. Choose the bank in the Payment account field.
4. Go to the Category section and enter Accounts Payable (A/P) in the Account column.
5. Enter the amount and other necessary details.
6. Click Save and close.

Then, we can proceed in creating the bill with the inventory items. Lastly, we link the Expense to the Bill by creating a Bill payment.

This article can be a useful resource if you require guidance on managing your bills and expenses: Enter and manage expenses.

Are you looking for ways to take your QuickBooks experience to the next level? I'm excited to share that you can connect with our QuickBooks Live Expert Assisted team. They are here to help you manage your transactions and ensure the data integrity of your account. Let us support you on your journey to financial success.

Furthermore, we can perform reconciliation once the transactions have cleared from the bank and are reflected in the statements.

We're here to support you if you need clarification on creating and applying prepayments to bills. Have a great day!