We received a payment from a customer who only had an estimate - QB directed me to make a sales receipt now we have created the invoice how to I apply that sales receipt?

Hi debbiedoll66!

Congratulations on receiving a deposit on your estimate! It shows that your customer really wants your product or service. Let's talk a little bit about the process in QuickBooks so we'll be guided in managing your sales receipt.

When a customer pays a deposit on an estimate, the transaction is automatically converted into an invoice. Therefore, you can delete the sales receipt to avoid doubling your income. You can't link that to the invoice either. You can refer to the article about requesting and accepting deposits on estimates in QuickBooks Online. It discusses how QBO handles your transactions and the things you need to check to make sure your records are correct.

Feel free to reach back out if you need more assistance with your transactions. Take care and have a good one!

This is not the solution I am looking for - I would like to talk to someone more about my issue.

One of the answers was to delete the invoice after creating it - that puts the deposit made in

uncat. income-not where I want it shown - also sometimes a deposit is made months ahead of the project starting and it is already reconciled as income if I use a sales receipts - I don't want to create an invoice

because the estimate always will be changing.   

Hi there, @debbiedoll66.

Thank you for sharing additional information. We're always here to help. I understand how important proper recordkeeping is to business. I'm here to ensure we get everything straightened out. 

To clarify, did you use Sales Receipt to record the upfront deposits? Before we go deeper into that, let me define the difference between an invoice and a sales receipt. If you sell items or services to customers and get paid in the future, you'll have to create an invoice. Then, use the Receive Payment feature once your customers pay what they owe you. Otherwise, you'll have to enter a sales receipt if you get paid on the spot.

If you accept upfront deposits or retainers for products or services, there are several steps you need to take to account for that money. First, you need to set up a current liability account for them. This is because upfront deposits are liabilities, not income, even though you deposit the money into your bank account.

To create a liability account:

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

Once the account is created, you need to create an item to use when recording retainers.

1. From the Gear icon, select Products and services.
2. Click New.
3. From the Product/Service information panel, choose Service.
4. Enter a name for the new product or service item (for example, Retainer).
5. From the Income account dropdown menu, select the liability account created in Step 1.
6. Hit Save and close.

You can now use this item to track upfront deposits you accept using a sales receipt or invoice. This process is to record the amount you receive in advance only. It increases your liability and asset accounts as we'll use the liability item you set up using the instructions above.

Here's how:

1. Click + New and Select Sales receipt.
2. Select the Customer name from the dropdown.
3. From the Deposit to dropdown menu, select the account this money will be kept in.
4. In the Product/Service column, pick the Retainer or Deposit item you set up.
5. Enter the amount received for the retainer or deposit in the Rate or Amount column.
6. Hit Save and close.

When it's time to charge a customer for the services you perform for them, turn retainers into credits on invoices. This decreases the amount in your liability account and applies the credit to your customer's invoice, turning it into income. 

Here's how:

1. Create an invoice or convert an estimate into an invoice for your customer that lists the services or goods you've provided.
2. On the last line of the invoice, in the Product/Service field, select the Retainer or Deposit item.
3. Enter the retainer Amount as a negative to subtract it from the invoice. You cannot enter a retainer amount greater than the invoice total. An invoice can have a zero total, but not a negative one.
4. Select Save and close.

In this article, we walk you through those steps: Record a Retainer or Deposit.

I recommend seeking professional advice from your accountant about this. They can help you properly handle this type of scenario. If you don't have one, you may visit our ProAdvisor site.

 
Feel free to visit the Community again if you need further assistance with this process and update me on how it turns out. I'm determined to ensure your success!