QuickBooks Tip – Handling Retainage

Preservation or retainage is usually a specific percentage, such as 10% of the total contract is held back by the developer in reserve for the protection of interest. Preservation is not kept at once, but rather considered the percentage given for the amount requested for each application for payment. The contract should set the terms, including the rate and the holding back will be paid

Contractors with Quick Books often encounter difficulties in handling retainage / retention. simply because the software is not a way to automatically deal with it.

Because QuickBooks does not have a built-retention function, as many of the more expensive construction specific software program, QuickBooks users to initiate bypass and make QuickBooks song retainage is held every progress account

Over the years I have seen some arounds work to various contractors, bookkeepers them, and even auditors have implemented, such as .:

1. Simply go retention amount of each invoice sitting in open their / R.
2. Billing for only amounts per line item that they will be paid for.
3. Create a customer who called holding power and then do some fancy diary entries each accounting period to move retainage from customers originating in the seizure of the claim customers.
4. Using a Quickbooks Discount Things to reduce retainage on individual accounts and map it to Film accounts as either income or expense account.
5. Create other current Asset account, called Retainage (Preservation) Demand and using the “Shares” automatically move money in this account every account that is generated.
6. create a sub-account fee deadline called Retainage (Preservation) and cover them with the use Items and more accounts move retainage amounts in this newly created accounts receivable sub-account.

Each of these methods has its own drawbacks, however, the first three (4) methods described cause the most problems with contractors accounting and methods I strongly recommend that you avoid.

The easiest method I know, is attributed Retainage as other working capital account at the table accounts – balance sheet section; However, to get with your accountant and have him teach you to make a journal entry that will remove the amount of income

To implement this system :.

1. Add Other current assets account table accounts called Retainage or storage requirement.
2. Create another fee or service item in items called “Less Retainage”, map this account you created in step 1, and Rate box in 10.0% .
3. Create another other fees or service item in items called “Retainage Due”, re-map the account you created in step 1.
4. Be sure that you have a Total items in subparagraphs phone.
5. Create Invoice or Progress Invoice billing for the total amount of before something retainage is stopped. In the first blank line at the bottom of the invoice, select Total item and then your Less Retainage points – the balance on the account that goes to A / R is now quantitative retainage and retainage dollars are moved other current Asset account.
6. You can create reports on Retainage standard payment account shows who owes you what to go to the table Accounts, click the account created in step 1 to highlight it, click on the Report button at the bottom of the window and choose Quick Report.
7. When you’re ready to bill retainage, create a “normal or usual” account using Retainage Due item and enter the desired amount from the report.

As I said earlier in this article, this is the simplest method – because it is just to add two more points to the bottom of the account and all the math and work is done for you ; However, the amount of retainage you drawn shows up in the profit and loss report in the income account (even if you run reports on a cash basis) as required by the Journal Entry be created to remove this from your income. You should consult your account to ensure proper entry.