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Villet
January 14, 2021
Question

how to record a retainer payment to a vendor in quickbooks desktop

  • January 14, 2021
  • 1 reply
  • 0 views

Hi ! In Quickbooks Pro  desktop, how do I record a retainer payment to a vendor (an attorney)?

2) And then, when the vendor/attorney invoices an amount each month, how do I record these payments as deducted from the retainer I originally paid? 

Thanks for any step-by-step guidance!

1 reply

C
Catherine_B
January 14, 2021

Hello there, Villet.

 

You have two options on how to record vendor prepayments. You can either use an Accounts Payable or Asset account to track the retainer. The Accounts Payable account is created by default by QuickBooks you can directly create a check for the deposit and then enter the bill given by your vendor. From there you can link the check to the bill. If you choose to use an Asset account, you'll want to create one first. 

 

Here's an article will walk you through the detailed steps on how to record vendor prepayments and apply payments to them. To keep track of your vendor transactions, you can pull reports and customize them.

 

Let me know if there's anything else that you need help with. Take care and stay safe!

    V
    Villet1
    January 15, 2021

    Thank you so much for your guidance! But I think I need a little more. I went and read the article you recommended. I chose "Option 2: Use an Asset account to track the prepayment." But I became stuck at Step 2. Can you help?

    Below quoted are the first steps in the article, and the place where I am stuck, indicated with my comments. Please note I made this prepayment (a retainer fee for an attorney) a couple months ago by credit card, so I am trying to properly assign that payment. I am using Quickbooks Premiere 2013 desktop. My comment is in >> Italic bold below...
    Thank you! Villet1 (Same as Villet), Jonathan Villet

    1. Create an Other Current Asset (OCA) account to track prepayments. 
      >> Good! I did all of Step 1.
      1. Go to the Lists menu, then select Chart of Accounts.
      2. In the Chart of Accounts, right-click anywhere, then select New.
      3. From the Other Account Types drop-down, choose Other Current Asset. Select Continue.
      4. Enter Prepaid Inventory as the Account Name.
      5. Select Save & Close.
    2. Write a check to your Vendor.
      >> This is where I am stuck (and also under Step 3, entering the bill from Vendor.) I paid this bill previously (October 2020) by credit card, so I did not write a check under this step. I looked at the previous credit card charge and there is no place to assign an account as you can do in the Write Check function. How do I use my credit card payment instead of a "Write Check" to show this deposit paid? BTW I assigned the bill to the OCA account in the Invoice from Vendor, see below under step 3, but I haven't adjusted the amount to be a negative amount yet. 
      1. Go to the Banking menu, then select Write Checks.
      2. Enter the vendor name, date, and payment amount.
      3. Go to the Expenses tab. In the Account column, select the OCA account.
      4. Select Save & Close.
    1. Enter the bill when the items arrive.
      >> Here is where I am stuck also. I had previously entered this bill from vendor. I have now altered the account (from a legal expense) to the OCA account I created above under Step 1. But I did not change the amount as a negative amount yet, since I did not complete step 2, above.
      1. Go to the Vendors menu, then select Enter Bills. >> DONE
      2. Go to the Expenses tab, then select the OCA account. >> DONE
      3. Enter the amount of the prepayment as a negative value. >>  NOT DONE YET
      4. On the Items tab, enter the items. The bill will equal the balance owed after deducting the prepayment. Note that recording the bill will reduce the asset account.
      5. Select Save & Close.
    1. Pay the bill balance.
      1. Go to the Vendors menu, then select Pay Bills.

    Select the bill you entered, then Pay Selected Bills. QuickBooks will then create a Bill Payment Check for the balance.

     

    M
    MirriamM
    January 15, 2021

    Hello again, @Villet1.

     

    Thank you for keeping us updated about the outcome when trying the steps suggested by my colleague @Catherine_B.

     

    If you treat your credit card as a vendor, you enter transactions in the Write Checks or Enter Bills window. Keep in mind that the charge from your vendor must be posted to the Purchase Prepayments current asset account you created and not to an expense or Inventory account.

     

    If you record your credit card transactions as they occur, using a Credit Card account, follow the below steps:

    1. Go to the Banking menu at the top. 
    2. Select Enter Credit Card Charges.
    3. Pick the credit card you used for this payment. 
    4. Enter the vendor’s name in the PURCHASED FROM field.
    5. Fill in the amount and post it to the current asset account for prepayments.
    6. Hit Save & Close.

    However, before we proceed with the steps, I highly suggest consulting your accountant or accounting professional for guidance on how your business should classify the prepayment. 

     

    Moreover, I don’t like to leave you empty-handed, you'll want to visit our Community Help Articles hub in case you need some related articles in managing your account.

     

    As always please let me know how this goes or check back if you need help with QuickBooks. Have an awesome day!

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