Invoice Line Items for a Construction Company

I'm glad to see you posting here today, Dr_Kinu.

I've seen that you've posted twice in this forum with the same concern. Don't worry, my colleague has already provided a solution to guide you in managing line items on your invoices. Feel free to visit this link: https://quickbooks.intuit.com/learn-support/en-us/reports-and-accounting/re-do-i-categorize-a-constr....

I'll always be here, ready to back you up if you require further assistance managing construction loan draw. Please let us know any time in the thread. Keep safe!

My question is about the invoice line items. For a construction company, shouldn't the line item account be a liability or expense because the service provided is not income producing. Right now,  the service item is going to income and that's not correct. Please help. Thanks

Hi there, Dr_Kinu.

I have additional details to share about the service item used for creating invoices.

When creating an invoice in QuickBooks, it produces income instead of liability because an invoice represents a request for payment from a customer for goods or services provided. 

If you intended to categorize it as a liability, you would have needed to create a bill rather than an invoice. When you generate a bill, it represents an amount owed to a vendor for goods or services received, and it increases the accounts payable, which is a liability account.

In this scenario, I would advise you to consult with your accountant. They can present you with more options for managing this situation effectively, preventing any errors in your books, and maintaining accuracy.

If you need further information about invoice line items for the construction company, add them in the comment below. I'm available to assist you. 

I create invoices to submit for draw requests to the bank. So the money is not real income so I was wondering how I setup the line items so I'm not inflating the owner's income. Maybe I'm wrong but I'm trying to make QB work smarter not harder. Do you understand what I'm asking?

Thanks for getting back to us, Dr_Kinu. Let me share some details about setting up line items in QuickBooks Desktop (QBDT).

If you accept retainers for products or services, there are several steps you'll have to take to account for that money. First, let's set up a liability account for them. Retainers are liabilities, not income, even though you deposit the money into your bank account.

Here's how:

1. Go to the Accountant menu and select Chart of Accounts.
2. Click the Account drop-down arrow and select New.
3. Select the Other Account Types radio button and choose Other Current Liability.
4. Tap Cotinue.
5. Enter the Account Name.
6. Hit Save & Close.

After creating the account, make an item for recording the retainers. I'll guide you on how to do it.

1. From the Lists menu, select Item List.
2. Click the Item drop-down arrow and select New.
3. Select the purpose of the deposits you collect in the Type drop-down arrow.
4. Enter a name for the product.
5. Choose the Reatiner liability account you created from the Account drop-down list.
6. Hit Ok.

You can now use it to record retainers you accept. You can check this article for the steps under Step 3: Manage upfront deposits or retainers. After that, proceed to the following procedure to complete the process.

Additionally, here's an article you can read more about the AR workflows in QuickBooks: Get started with customer transaction workflows.

Let me know if you need more help handling line items in QuickBooks. I'm always around to help you out. Take care!