If you take upfront deposits or retainers for your products or services then you there are few points that you need to consider and perform some steps to account for that money. This article will provide you an in-depth analysis of it and provide you the steps to manage upfront deposits or retainers in QuickBooks from setting up a liability account to manage a canceled job. This article will also help you to set up, record and manage upfront deposits in QuickBooks Desktop.

If you are not sure about performing these steps then we recommend you to contact the QuickBooks Support department and get your issues resolved instantly.

How To Manage Upfront Deposits Or Retainers?

Step 1: Set up an account for upfront deposits or retainers

You have to set up a current liability account for them prior to accepting any upfront deposit or retainers. The account should be a current liability account and the reason being is that the upfront deposits and retainers are not your income, they are liabilities even though the money gets deposited into your bank account.

Perform the following steps to create a liability account:

  • From the main menu, go to Lists > Charts of Accounts
  • Right-click on the Chart of Accounts window and click on New from the drop-down menu.
  • For the Account Type, select Other Current Liability.
  • Provide a name to the account (for example, Upfront Deposit) under the Name

Note: You have to set up account an opening balance of zero when you track existing upfront deposits or retainers.

  • Click on OK.

Once you create the account, create an item to use while recording upfront deposits or retainers.

Step 2: Create An Upfront Deposit Item

If you want to accept upfront deposits or retainers then you have to set up an item to user while recording the associated transactions.

This item is connected to the liability account you recently set up to record upfront deposits properly.

Following steps will allow you to create an item:

  • From the main menu, go to List and then select Item List.
  • Right-click on the Chart of Accounts window and click on New from the drop-down menu.
  • Choose the purpose of the collected deposits from the Type drop-down list.
  • You can click on Service if you collect upfront deposits for services. You can also select Other Charge if you collect upfront deposits for products.
  • Provide a name to the account (for example, Upfront Deposit) under the Name/Number
  • From the Account drop-down list, click on Upfront Deposit liability account.
  • Click on OK.

You can now use this item to record upfront deposits or retainers you accept.

Step 3: Record Upfront Deposits Or Retainers You Receive

You must record the upfront deposit or retainer when you receive it from a customer.

  • Go to Customers > Enter Sales Receipts
  • Choose a customer or a job From the Customer:Job drop-down list.
  • If you get the Deposit To field then choose the account in which you deposit funds.
  • If the field doesn’t appear on your screen then it means that the funds are being identified as Undeposited Funds and you can deposit them later.
  • Choose the payment method.
  • Provide all the required information like Date and Sale No, in their respective fields.
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  • Provide the amount of deposit or retainer in the Amount
  • Click on Save and Close.

The deposit or recorder gets recorded in the form of liability.

Step 4: Create invoices

When you get a retainer or an upfront deposit for a product or service then you need to create an invoice for the product service.

Create an invoice by following below mentioned steps:

  • From the main menu, go to Customers and then click on Create Invoices
  • Select the customer or job from the Customer:Job drop-down menu.
  • Provide all the required information like Date, Invoice#, Bill to/Sold to and Terms in their respective fields.
  • Choose the items to be added in the Detail
  • Click on Save and close.

Step 5: Apply Upfront Deposits Or Retainers To Invoices

You can apply for the upfront deposit or retainer as payment on the invoice if you provide the product or service for which the upfront deposit or retainer was accepted and then the time has come to collect the payment. Doing this will convert the deposit from liability account to income account.

You can do this by following two ways and they are as follow:

  • Enter the upfront deposit or retainer as a line item on the invoice
  • Apply the upfront deposit or retainer as a credit

This section will help to perform each step. Choose the method that is best for your business.

Option A: Enter upfront deposits or retainers as line items

If an upfront deposit or retainer is applied to a customer’s invoice then you have the option to enter it as line item under the invoice.

Follow the below mentioned steps to enter an upfront deposit or retainer as a line item on an invoice:

  • Go to the customer invoice
  • Go to the Detail section and choose the Upfront Deposit item from the next available line.
  • Provide the deposit amount that will be applied to your invoice under the Account
  • Click on Save and close.

The sample screen shows the applied deposit was for the entire amount of invoice so the transaction will be marked as if it was paid.

Option B: Apply upfront deposits or retainers as credits

You can provide the amount as a credit to the invoice while applying for an upfront deposit or retainer to a customer’s invoice.

Follow the below mentioned steps to apply an upfront deposit or retainer to an invoice as a credit:

  • Go to Customer menu and then choose to Create Credit Memos/Refunds
  • Select the customer or job from the Customer:Job drop-down menu.
  • Choose the Upfront Deposit item created by you under the Detail
  • Provide the amount of your deposit or retainer in the Amount
  • Click on Save and close.
  • Select Apply to an invoice from the Available Credit dialog box.
  • Click on
  • From the Apply Credit Card to Invoice box, choose the invoice that will be applied as the upfront deposit or retainer and select

The upfront deposit or retainer is applied to the invoice you’ve selected.

Canceled Job: Manage Upfront Deposits Or Retainers

If one of your customers cancels a job for the upfront deposit or retainer that you’ve accepted then the deposit won’t remain as a liability.

You are provided two options to manage upfront deposits or retainers for canceled orders. You can choose any of the option that suits your business.

  • Keep all or part of the deposit
  • Refund the full deposit to the customer

Option A: Keep all or part of an upfront deposit or retainer

Follow the below steps to keep all or part of the deposit after the cancelation of job or order:

  • Create an invoice for the customer by going into the customers menu.
  • From the Detail section, choose required items for the jobs or projects that got canceled from the Item drop-down list.
  • Select the item you created for Upfront Deposits from the Item drop-down menu.
  • Provide the amount that you will be kept as a negative value in the Amount
  • You can enter a note make tracking this transaction in reports easy.
  • Click on Save and close.

The upfront deposit or retainer’s portion kept by you is considered as income, and the part not kept by you is recorded as refunded to the customer.

Option B: Issue a refund of an upfront deposit or retainer

Follow the below mentioned steps to issue a refund:

  • Go to Customer menu and then choose to Create Credit Memos/Refunds
  • Select the customer or job from the Customer:Job drop-down menu.
  • Choose the Upfront Deposit item created by you under the Detail
  • Provide the amount of your deposit or retainer in the Amount
  • Click on Save and close.
  • Select Give a refund from the Available Credit dialog box and then click on OK to close it.
  • From the Issue a Refund dialog box, choose the bank account in which an upfront deposit or retainer was actually deposited from the Account drop-down list.
  • Click on OK to close the dialog box.
  • You can also specify the way in which the customer will be refunded by selecting options from Issue this refund via drop-down menu.
  • Click on Save & Close

The refund is issued for the full amount of the upfront deposit or retainer.

Follow The Steps Carefully or Contact Or ProAdvisors

Technical Support For QuickBooks Issues

The provided solution should allow you to Manage upfront deposits or retainers in QuickBooks Desktop. However, sometimes this process can become very complex and you may face some issues while managing or creating them. In such scenarios, you need to get in touch with us at our toll-free QuickBooks Tech Support Number +1800-210-5289 and get your issues resolved instantly.

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Manage Upfront Deposits Or Retainers In QuickBooks

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