Setup escrow on future event used to pay entertainment at later date?

I can share some insights about how you can effectively handle sponsorship ads in QuickBooks Online, treasurer-newbos. 

Yes, the correct approach is to create a regular invoice for each sponsor for the costs associated with the ads. Then, recording a payment after. Please be reminded that the payment date will depend on the actual date of receipt. 

Once the event is over, you can handle the payment of 80% to the contract entertainment provider by recording a barter transaction and keeping the 20% revenue. Here’s how:

First, set up a barter bank account

1. Go to the Gear icon and choose Chart of accounts.
2. Click on New to create a new account.
3. From the Account Type dropdown menu, select Bank.
4. From the Detail Type dropdown menu, choose Cash on hand.
5. Enter the account name. (ex. Barter Bank Account).
6. Select Save and Close.

Next, create an invoice and record the payment. Please note that Before recording your barter transaction, ensure that you have added your barter partner as both a vendor (for the bill) and a customer (for the invoice). Since it is not possible to have the same name in both lists, make a slight variation in one of the names.

Create an invoice:

1. Go to + New and select Invoice.
2. From the Customer dropdown, select your vendor’s (barter partner) name.
3. Enter all the necessary information.
4. Select Save and Close.

Record an invoice payment:

1. Go back to + New and select Receive payment.
2. From the Customer dropdown, select your vendor’s (barter partner) name. Note: The details and info from the invoice you created earlier will appear under Outstanding Transactions.
3. Fill in the date and amount.
4. Select the Payment method dropdown, then Add new.
5. Enter “Barter” in the Name field, then select Save.
6. Select the Deposit to dropdown, then select Undeposited Funds account.
7. Tap Save and close.

Lastly, generate a bank deposit, and in the section for Add funds to this deposit, input a negative value representing 80% of the amount to be paid to the vendor, while retaining the remaining 20% as income in your account. I've attached screenshots for your visual reference:

Furthermore, it's also a good idea to consult with an accountant to ensure accurate recording and proper handling of these transactions based on your specific business needs.

If you have questions or need further help managing your account or related issues, reply to this thread. I'll be ready and waiting to assist you again.

@treasurer-newbos 

Ignore @GlinetteC 's response.  It is so very wrong and it will mess up your books.  

"1. Do I invoice sponsors as a normal invoice?"

It depends on whether you're on cash or accrual basis.  If you're on cash basis, then the payments are income when received so the invoice should have items that are mapped to an income account. 

If you're on accrual basis, the invoice should have items that are mapped to your 'Deferred Revenue - Event XYZ' liability account.  Or, you can put items on the invoice that are mapped to an income account and then move the income to Deferred Revenue with a journal entry after the invoices are created (debit Income, credit Deferred Revenue - Event XYZ').  You will need to move that back to income when the event occurs. 

"2. When they pay how do I record payment?"

Go to New > Receive payment, just as you would for any other invoice.

The 20% in expenses you pay out to the contract entertainment provider next August will reduce your net income to 20%.  Hope that helps.