How to enter prepayment to the vendor supplier. How do I match vendor bill received later?

You have two ways of recording the transactions depending on the type of supplier pre-payment. Is it quick turn around or will it take a longer time to complete the job or service?

1) When you make vendor pre-payment, use Accounts Payable (A/P) under Account tab. When supplier bills you, create a Vendor Bill in QBO and use an appropriate account. That will clear the vendor pre-payment balance. This is the easy way to enter the transactions especially say if you can record both entries within less than a month. You will then need to match pre-payment and entered Bill to clear the account by clicking Pay Bills tab (Create + sign > Vendors > Pay Bills).

 
PREPAYMENT

 
ENTER BILL

 
MATCH PREPAYMENT AND BILL

 
2) You may use this method if pre-payment to the supplier will take longer than 30 days to clear. In order words, for example, you make pre-payment job in January and the job will not be complete until June.

To set up pre-payment to the supplier, create a new account. You would set up “Pre-Payment to Supplier” as other current assets in QBO
 
SETUP PREPAYMENT SUPPLIER ACCOUNT

 
When you receive a Bill, enter expense account to be charged. On next line, select Pre-Payment to Supplier account and enter it as a negative amount. If the received bill is exactly the same as pre-payment then, it will net out as zero entry. But if the actual bill says higher than pre-payment amount then, you just make the payment for the difference. That will clear the account.
 
ENTER BILL AND CLEAR PREPAYMENT ACCOUNT

 
SUPPLIER ACCOUNT

 
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How to handle vendor subcontractor retainage retention in QuickBooks Online

Let’s get started. Follow the step-by-step instructions.

Example: A vendor/subcontractor perform work on our behalf, we deduct 20% of the bill amount as Retention when we pay them. This is to protect us from any potential liability out of their faulty work. How do I record it in Quickbooks?

1. To set up sub-contractor retainage tracking, create a new Retainage account in the Chart of Accounts:

  • From the left Dashboard panel, click Accounting.
  • In the Chart of Accounts, click “New” green button at the far top right corner.
  • For Category Type, select Other Current Liabilities.
  • For Detail Type, select also Other Current Liabilities.
  • For the Name, enter Subcontractor Retainage Payable.
  • For the description, enter same as Name or something like 20% withheld from subcontractor payments.
  • Click Save and close.

See screenshot below for reference.

 

2. To enter expense bill and withheld retainage from a Subcontractor Bill:

In this example: Subcontractor bill is $10,000; pay them $8,000 and retain $2,000 for 4 months.

  • Click the + plus symbol, located at the top of the screen.
  • Select Expenses, Check or Bill under Vendors heading.
  • Select your subcontractor as a vendor.
  • Fill out the remaining fields of the vendor invoice.
  • Select COGS or expense account under Account tab. (line 1, amount = $10,000).
  • Line2, select Subcontractor Retainage Payable account, enter negative amount (example = -$2,000).
  • The total amount should show $8,000.
  • Click Save and close.

See screenshot below for reference.

 

3. To run a Subcontractor Retainage Payable account report for various subcontractors:

  • From the left Dashboard panel, click Accounting.
  • In the Chart of Accounts, locate “Subcontractor Retainage Payable” account line.
  • Go to “View register” under Action column at the far right corner.
  • From the drop-down arrow, select the “Run Report” button.
  • Row/Columns at the top left, change “Group by” to Vendor (especially if you have multiple vendors with retainage balances).
  • Click Run Report.
  • This report will give account details by vendor balances.
  • Since you will need to track these retainage activities, click “Save customization” green button, located in the top-left corner of the report window and name it “Subcontractor Retainage” report and Save.
    Now, you have saved this report for future use.
  • Next time, when you want to run this report (Dashboard > Reports > Custom Reports tab > locate Subcontractor Retainage report and run the report).

See screenshots below for reference.

 

4. To make 20% Retainage balance payment:

  • Same as to enter vendor expense bill as above (step #2).
  • For an account, use Subcontractor Retainage Payable account. Example, $2,000. That will clear the account but do the account analysis on a regular basis.

See screenshots below for reference.

5. Run Report after 20% withheld paymentL
Follow step#3 above on how to run report.
See screenshots below for reference.

 

For “How to handle customer retainage retention in QBO” click HERE.

 
If you have questions regarding this article or any other QuickBooks issues, please CLICK HERE to ask a question.

 

Partial Purchase Orders in QBO

Partial Purchase Orders feature is available in QBO plus now.

You can create a purchase order for both accounts and items tabs. Item tab is more for inventory items. Account tab is an expense that adds directly to Profit and Loss. You can now receive partial shipments and the PO will remain open for back ordered items.

Create a Vendor Bill (or Check, or Expense) form. Select a Vendor, a drawer at the right panel will open. Select add to the bill. You can select to choose either partial or complete order. For back orders, it will show as back ordered quantity and open balance amount for inventory items on a PO. For accounts, it will show open balance amount. The Purchase Order will show the status as open. You can run Open Purchase Order Detail report and Open Purchase Order List report for detailed information.

 





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Why Does Vendor Register Not Show All Transactions Made For That Vendor

Why Does Vendor/Supplier Register Not Show All Transactions Made For That Vendor/Supplier

In Vendor Register, only transactions that affect Accounts Payable (Bill/Pay Bills) appear in the register. You will need to run Transaction List by Vendor to see all the payment transactions.




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How to merge vendors suppliers with transactions

You can merge vendors, QuickBooks deletes one vendor and reassigns all its data to another vendor.

IMPORTANT: YOU CANNOT REVERSE A MERGE AFTER THAT.

  • In the left navigation bar, click Vendors.
  • Select the vendor whose name you don’t want to use.
  • Click Edit.
  • Change the vendor’s Display Name so that it is the same as the vendor you’re merging with.
  • Click Save.
  • Click Yes to confirm that you want to merge the two vendors.

mergevendor1

mergevendor2

mergevendor3

mergevendor4

mergevendor5






How do I fix unapplied cash payment income and unapplied cash bill payment expense

You may see two accounts for UNAPPLIED cash payments if you report Profit and Loss on a cash basis. It will automatically trigger to these two accounts simply because you have entered certain deposit and payment transactions differently than normal flow in QBO.

These two accounts are automatically added to the Chart of Accounts when the new company file is created. You can’t delete or change these two accounts.

Here is the main reason that will trigger these two account types in QBO:

  • Triggers “Unapplied Cash Payment Income” when the date of the customer deposit date is before the invoice date it’s applied to.
  • Triggers “Unapplied Cash Bill Payment Expense” when the date of the vendor payment date is before the bill date it’s applied to.

Example of “Unapplied” Customer Deposit and Vendor Payment transactions

unapplied deposit
unapplied deposit
unapplied check
unapplied check
bank register
bank register
cash basis unapplied pnl
cash basis unapplied pnl

Changing “Invoice” and “Bill” dates to be prior to payment dates should work for most transactions in this account. However, there may be other unknown circumstances where the issue may not be easily fixed. In that case, you will need to analyze each transaction and resolve the matter. Or get help from the expert.

invoice
invoice
receive payment
receive payment
bill
bill
bill payment
bill payment
cash basis applied pnl
cash basis applied pnl

 


This video will show how to fix “Unapplied Cash Payment Income” and “Unapplied Cash Bill Payment Expense” on a cash basis Profit and Loss report.

 


OTHER HELPFUL LINKS:
(Also, refer to IRS Publication 538 Constructive Receipt of Income for more details.)
https://www.irs.gov/publications/p334/ch02.html
What’s Unapplied Cash Payment?
https://community.intuit.com/articles/1146009-what-s-unapplied-cash-payment

 


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How does one print a memo line on a check

When you enter a check (create + sign > check), there is a memo section on the bottom left the side of the check (see attachment below). If you have text entered in that memo area, it will print on a check.

check memo line
check memo line

However if you enter a bill (create + sign > bill), even if you’ve entered text entered in that memo area, it will not print on the check when select pay bills (create + sign > pay bills).

If you need to print a fixed memo line like the account number or a specific memo line message on a check print, you can select “account number” field on vendor information page (see attachment below). That way it will print the same memo line on specific vendor checks all the time.

vendor info acct no
vendor info acct no
check print with memo
check print with memo

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What to exclude transactions on 1099-MISC forms when you pay an independent contractor

The basic rule is that you must file a 1099-MISC forms when you pay an independent contractor (sole proprietor type) $600 or more in a year payments you made by cash or check. ( https://www.irs.gov/pub/irs-pdf/i1099msc.pdf )

Beginning with the 2011 tax year, the IRS requires you to exclude from Form 1099-MISC any payments you made by credit card, debit card, gift card, or third-party payment network such as PayPal. If they meet the requirements, these payments are being reported by the card issuers and third-party payment networks on Form 1099-K.

box7 excluded

 
In QuickBooks, here is a reference list of codes to use when you record payment transactions to exclude:

http://support.quickbooks.intuit.com/support/pages/inproducthelp/core/qb2k13/contentpackage/payroll/1099/popup_1099_exclude_text.html

Here is another helpful article to get familiar with 1099 exclude rules.
http://payroll.intuit.com/support/kb/2001238.html

Note: In QBO, 1099 vendor feature is available in PLUS version only.


 

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Owner paid a subcontractor with his own money. How to make sure Vendor shows up on 1099 and still able to write the reimburse check to the Company Owner

First, you will need to create a new dummy bank account. You will also need a due to the owner as a liability type account to use it for later reimbursement.

Step#1 Use bank deposit form (create + sign > other > bank deposit) to record contributed amount by the owner to pay a contractor. Account to show as due to the owner liability type account. See screenshot below.

owner deposit
owner deposit

Step#2 Use Expense form (create + sign > vendor > expense) to create contractor expense posted to appropriate expense account. See screenshot below.

contractor expense
contractor expense

Step#3 Use Check form (create + sign > vendor > check) to write the reimburse check to the Company Owner. See screenshot below.

check to owner
check to owner

In case there is no need to reimburse the owner (step#1), you will use a capital contributed account which would be an Owner’s Equity type account.

Review of 1099 vendors and payments list. See screenshot below.

review 1099 vendors payments
review 1099 vendors payments

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