Does anyone have advice on how to handle a 50% deposit for a customer without invoicing until the end of the job?

You can just receive the payment and it creates a customer credit memo for that amount and you apply it when you issue invoice.

Better is use a Sales Receipt for an item you call Deposit on Job and have that item post to a current liability account you set up as Prepayments. Not income but you now owe the customer. Then when job is done create an invoice and add a line item for the prepayment deposit as a negative.  Make sure the prepay item is not taxable when you set it up

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@john-pero wrote:

You can just receive the payment and it creates a customer credit memo for that amount and you apply it when you issue invoice.

 

 

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No, no credit memo is created. Just a credit on account, and no need to actively apply it

 

Better is use a Sales Receipt for an item you call Deposit on Job and have that item post to a current liability account you set up as Prepayments. 

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It's only better if you don't mind "bypassing cash vs accrual accounting", and if you don't mind the customer's balance not showing in the customer screen

Technically because there will be an invoice it is accrual. And because payment precedes invoice QBO will haunt the user with an unapplied cash payment that screws up Class tracking

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@john-pero wrote:

 QBO will haunt the user with an unapplied cash payment 

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It's better to haunt the user with an accurate cash-basis P&L, than not be haunted but have an inaccurate cash-basis P&L.

Class reporting will not work if you want to toggle between cash and accrual basis. So you have to pick which is more important between cash vs accrual and class reporting

The mere existence of invoicing violates the sanctity of pure cash basis so a deposit therefore must be on a sales receipt as other income. The future invoice can be reduced by a negative deposit income line item.

Side note- Invoices and Bill's are allowed in a hybrid cash basis but once a company deals in inventory the IRS demands accrual

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@john-pero wrote:

The mere existence of invoicing violates the sanctity of pure cash basis so a deposit therefore must be on a sales receipt as other income. The future invoice can be reduced by a negative deposit income line item.

 

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QBO is designed to run either cash-basis or accrual basis reports, with a toggle to switch between the two.  But that only works if you keep the books on the accrual basis. And if you use a SR for a prepayment, then you cannot toggle between cash and accrual P&L, as both will include the SR as income. The only way to record a prepayment and be able toggle between cash and accrual is to use a Receive Payment type transaction to record the prepayment.  On a cash basis P&L it will correctly show as income, called "Unapplied Cash Payment", (because the computer does not know what account to use).  It correctly will not show on an accrual-basis P&L. 

If you use a SR to record a prepayment, it WILL show on an accrual-basis P&L, which is wrong.

I have often done this: create a deposit account and then create an invoice for the deposit amount and apply the payment to that. At completion of the project I typically create a final invoice and then apply the deposit payment to that and delete the original invoice. You have to remember to back date the final invoice to BEFORE the original deposit payment though - or it shows as unapplied....complicated.