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It's nice to see a new face here, Yshaveiko. I've got some options you can use to record your client's prepayments and taxes without issuing an invoice for now.
First, you can create a deposit affecting A/R for the prepayment.
Additionally, the proper recording is through a retainer or deposit, which turns funds held from a liability account into income once applied. Let me walk you through the steps below.
- Go to the Gear icon, then select Chart of accounts.
- Click New.
- From the Account Type ▼ dropdown menu, choose Current liabilities.
- Pick Client Trust Accounts - Liabilities from the Detail Type ▼ dropdown menu.
- Enter an account name (for example, Trust Liabilities).
- Specify a Default Tax Code, enter an Unpaid balance, and an as of date.
- Hit Save and Close.
After that, create a retainer item you can use to receive the deposit from your customer. I'll show you how.
- Go to the Gear icon and select Products and Services.
- Click New.
- On the Product/Service information window, pick Service.
- Add a name for the item.
- Choose Trust Liability Account from the Income Account drop-down.
- Tap Save and Close.
Here's an article for the next steps: Record a retainer or deposit.
Moreover, QuickBooks automatically calculates taxes so you can only track them on expenses, checking, and income accounts. That's why you cannot utilize A/R or A/P (liability account). In this case, create an invoice to allocate a tax code to the transaction.
Furthermore, please ensure the Automatically apply credits feature is turned off so that the credit won't apply to any open invoices. Read this material for more information: Create and apply credit memos or delayed credits in QuickBooks Online.
Lastly, this guide will help you match the entries in the program: Categorise online bank transactions in QuickBooks Online.
I'm just around the corner to provide additional assistance in managing prepayments from your clients. Have a good one, and stay safe.