Posting Payments to FY they were rec'd but are for next FY

It's great that you’re taking the initiative to accurately reflect the advance payments for your next fiscal year in QuickBooks Online (QBO), Richmond. Let’s dive into the steps together so you can feel confident in your financial management.

I suggest setting up a deferred revenue liability account in your QBO accounting records to monitor any retainers or advance payments from your customers for the upcoming fiscal year. This approach defers the revenue until earned, aligning with the matching principle in accounting. 

For detailed steps, here's how:

1. Go to Transactions, then choose Chart of Accounts.
2. Select New.
3. From the Account Type dropdown menu, choose Other Current Liabilities.
4. From the Detail Type dropdown menu, select Trust Accounts - Liabilities.
5. Enter a Name for the account or accept the suggested name.
6. Select an option from the When you want to start tracking your finances from the account in the QuickBooks dropdown list.
7. Hit Save and Close.

After this, proceed on creating a retainer item to use when making an invoice:

1. Navigate to Sales and choose Products and Services.
2. Click New, then select the Service or Non-inventory type.
3. Enter (Retainage) for the item Name.
4. Put a checkmark next to I sell this product/service to my customers, under Sales Information.
5. From the Income Account drop-down, select the Retainage Receivable account (the account you've set up).
6. Click Save.

Once everything is in place, you're now ready to enter the retention amount on the invoice:

1. Choose + New.
2. Select Invoice.
3. Choose the Customer name from the dropdown list.
4. In the Product/Service column, select the Retainer item you set up.
5. Enter the amount received for the retainer or deposit in the Rate or Amount column.
6. Select Save and Close.

When you bill a customer for services, you can apply the retainer or deposit as a credit on the invoice, treating it like a payment. Refer to Step 5 in this article for detailed guidance: Record a retainer or deposit.

To maintain accurate records, I recommend reconciling all your accounts monthly. It ensures that your transactions are recorded correctly in QuickBooks, allowing you to have balanced data by the end of the year and be well-prepared for tax season.

Additionally, I’d like to provide these valuable resources to help you personalize your reports in QBO. These articles offer step-by-step guidance on customizing your financial reports to suit your business needs:

• Customize reports in QBO
• Custom reports in QBO

I encourage you to comment below if you have any more questions or need additional assistance with your financial transactions or any other inquiries in QBO. I am here to support you at every step.

I would like to use this process, however I have Premier Nonprofit edition 2021. I don't have a "Products and Services"

I appreciate you following the instructions above, Fisher. However, those instructions were designed for QuickBooks Online, whereas you are utilizing QuickBooks Desktop. Allow me to offer some additional guidance for QuickBooks Desktop.

Before you can accept deposits, you'll need to set up a current liability account for any deposits received from your customers. These deposits are considered liabilities, not income, even though they are deposited into your bank account. Once this account is set up, you will also need to create a specific item linked to the new liability account, which will be used when recording these transactions. This setup ensures that deposits are properly recorded when received from a customer.

After you have recorded a deposit for a product or service, the next step is to create an invoice for that particular product or service. Here’s how to do it:

1. Navigate to the Customers tab, located between the Company and Vendors tabs.
2. Click on Create Invoices.
3. Use the Customer Job dropdown list to select the appropriate customer or job.
4. Enter necessary details such as the Date, Invoice #, Bill to/Sold to, and Terms in the corresponding fields on the form.
5. In the Detail section, select the items (products or services) to include in the sale.
6. Select Save and close.

When it’s time to process payment for the product or service for which you've accepted a deposit, the deposit can then be applied as payment against the invoice. This transaction shifts the balance from the liability account into your income account.

There are two ways to do this:

• Enter the deposit as a line item on the invoice.
• Apply the deposit as a credit.
   

Moreover, you can customize customer reports in QuickBooks Desktop to better meet your specific needs.

If you need further guidance or have any more questions about using QuickBooks Desktop. Feel free to reach out to us. We're always here to help!