QuickBooks Online Contractor Retention

[@worldwidequickbooks]

Hello to all my contractor friends using QuickBooks online! This QuickBooks Online training session teaches how to track retention withheld from each job invoice. Contractor retention is an agreed upon amount that the client will withhold from each job invoice until the end of the job. Once satisfied, the total accumulated retention that was built up after each job invoice, will be the final contractor job payment. This is assuming the client is happy. I thank you all and hope that you will click “like” and “subscribe.

[@societylost4344]

Bro thank god for this channel! You saved me a ton of time on my problem. Don’t know why I didn’t get you for a search result before now! 7 years of struggling…..lol!

[@worldwidequickbooks]

Glad I could help! I have a Video for any other topic you could need. Just ask! And I hope you will click like after watching H1 and subscribe to help support the free channel for everyone Mark

[@joietan7983]

Thank you for very clear videos. I would rather customer to pay 95% of the invoiced amount rather than create 5% Retention receivable. Because it will get notice of an overdue invoice after sometime which encourage the contractor to chase the customer for confirmation of the job well done. I am not sure about user access privillege to report. Usually the admin clerk will not have access to report, therefore the clerk may not be aware of any portion of Retention receivable that must be followed up with the customer.

[@worldwidequickbooks]

Whatever works for you. These are just suggestions

[@valerieaaron3883]

This is a nice video on retainage on receivables. Do you have a video on retainage on payables? Trying to figure out how to account for the retainage on invoices from my subcontractors that won't be due for over a year so should not be in my AP aging reports now.

[@worldwidequickbooks]

Thank you for asking and that's a very interesting question You can figure out how to do it by Simply doing everything in the retention video but make a vendor equivalent transaction. For example, the vendor equivalent of an estimate, is a purchase order. The vendor equivalent of a customer's invoice is a vendor's bill. You can make items that are connected to expensive accounts the same way that you can make items that are connected to an income account. One day I might add to the contractor's course how to deal with subcontractors and 1 of those things will show the retention that the subcontractor has with you It will be a while until I make it but I think you can figure it out if you think about what the equivalent would be on the vendor side. You should also click on the top right of the video to make sure that you have the link to the full contractors playlist because that will help you figure things out especially if you watch the videos in proper order Mark

[@VitaliyVechtomov]

the problem im having is if the retention is not paid but the invoice is the full amount for the invoice is shown in the profit loss report, which make the revenue higher than what it actually is.

[@worldwidequickbooks]

It should work perfectly the way it shows in this video and if it does not then you have it set up wrong I suggest you click in the top right corner of this video to get the link to the full contractor's playlist for QuickBooks Online If you watch it in proper order you will understand everything in its context and I think there's an additional video about retention that goes with this one and it's right next to it in the playlist You will see it will clarify everything Mark

[@AliciaBarbas-sc2es]

Your video is awesome, but I am having trouble with Products and Services not allowing me to select an account that is not associated with Income or expenses. I keep getting the error stating , "Something's not quite right: You can't associate a product or service with accounts of certain types (such as Accounts Receivable and Accounts Payable). If the product or service is something you sell, use an income account. If the the product or service is something you buy, use an expense account." Not sure what I am doing wrong. Is there is anything you recommend? Thanks in advance :)

[@AliciaBarbas-sc2es]

Nevermind it WORKED!!!! I had to remove the purchasing information, so I'll have to figure out the subcontractor side of things but this is awesome! Thank you, thank you, thank you!

[@worldwidequickbooks]

Glad you're on track and I'm here if you have any other questions Mark

[@gsusgrl40]

I have a question. On the P&L, our income on the QBO report is showing the whole amount invoiced, but not the amount paid. On QBD, though, our profit is that of only how much we received via payment (after retention). How can you fix this on the report, especially in those latter months and preparing for taxes, and retention still hasn’t been paid?

[@worldwidequickbooks]

Thank you for asking Your question is really about the difference between the accrual method of accounting and the cash method of accounting The default method is the accrual method where revenue and income is recorded when you Bill the client and not when you physically receive the cash However, you can change the way your profit and loss is displayed to switch from the accrual method to the cash method Once you do that, then the profit and loss will only display income for the amount of invoices that have been paid and the amount received and applied to those invoices You can change the settings in either the report Itself by clicking on the cogwheel or by going to the account settings in the cogwheel the way we learned in an earlier video Chapter I suggest you click in the top right corner of this video to get the link to the full contractor's playlist and you should watch it in proper order to make sure that you learn everything in the right context and then you will know how to switch between accounting methods Please confirm that you found the video or I will direct you to it but you can definitely change the option to make your profit and loss show only income for the amount of invoices that have been paid Mark

[@paultsiprush9931]

were you able to figure out a work around for this? aside from having to switch from acrual to cash?

[@sandrawhaley1270]

How do you set up the same concept for the subcontractors to track the retention that you with hold from them until the project is complete? Would it be set up the same way as this one for the contractor?

[@worldwidequickbooks]

Thank you Sandra, Yes it would, but it would be "in reverse". You would have a "liability" account for retention payable. You would have to use a "purchase order" as your "estimate" for the subscontractor. You would eneter a BILL instead of an INVOICE against the purchase order. I do not yet have this subcontractor contract stuff but I have everything else for you if you click in the top-right corner of the video to get the full playlist for QBO contractors. Watch all in proper order and you will have everything you need. -Mark

[@loriflath5917]

Great Video Thank you. I am working with construction and using estimates. When creating an estimate do you add the retention amount in the estimate or just the invoice? Also, when I run a profit and loss for a specific project once the retention is paid it is not showing as income to the project. Is this correct?

[@worldwidequickbooks]

Thank you Lori, Both are correct. The retention should NOT be on the estimate. It does NOT affect how much you estimate you need. The retention report should be enough to manage it and send it out with each updated invoice. Also, it does NOT affect yoru profit and loss. It only effects your balance sheet. It's not really income or expense. It's money OWED as a result of income that was already billed for and recorded in the normal process of Contractor bookkeeping. I hope you will watch the whole playlist in order. You will learn it properly and more thouroghly if you see the topics in the proper oreder and the QB for a contractor is breeze. Please confirm that you can find the set up playlist and the main contractor's playlist in the description tab or the top right corner of this video. I can send you the links if you need. -Mark

[@loriflath5917]

@@worldwidequickbooks I am still running into issues with the retention. I have retention set up the way you explain it but the CPA is showing at the end of year the income is overstated (Cash Basis) . I also watch another video that said this poses and issue. Do you know if at the end of the year we have to make some kind of adjustment? Also you mentioned a whole play list. Can you please send me the link? I really appreciate it and your videos.

[@leehuiling7222]

When I double click the retention receivable on the trial balance to view the transaction report, I only see retention receivable and beginning balance showing there, there is no any other transactions showing in the transaction report. and the beginning balance is $135.00. And it doesn’t allow me to click to view any of two. Could you please tell me how to fix. Thank you!

[@worldwidequickbooks]

Thank you, I do want to help but.I don't know if you have a tech support issue or you are just missing the rest of the information If you click on the top right corner of this video , you will get the link to the full playlist and there is an additional video about retention And it's right next to this one in the playlist I suggest you watch the playlist in proper order to understand everything properly.And if that still doesn't work , then you might have a text support Issue that you will have the contact The technical people four Mark

[@leehuiling7222]

@@worldwidequickbooks ok, thank you for explaining!!!

[@kim420my]

I work for a general contractor that hires subcontractors. When a sub sends us an invoice the retention should show that its held. I would like to run a report that would show how much the original contract is, the amount of the previous invoices, and the current invoice both before retention and after retention and the percent completed. How do I do that?

[@worldwidequickbooks]

Thank you Kim, All those reports and that information is in the full playlist. This video is only 1 in the little mini series. You can find the link to all the videos in the playlist in the description field or click in the top right corner of the video for the link. You should view it in order so you can learn how everything you aksed for fits in to the whole context. -Mark

[@lisafree8733]

Our customers are retaining tax as well. How can we include tax in the overall retention?

[@worldwidequickbooks]

Taxes are included in the retention that means that taxes should have been included as one of the items in the original estimate and all the invoices and therefore if you include taxes one of the items then this method will work perfectly and you don't have to do anything differently

[@ashleyswitzer4455]

We need to send an invoice for just the retainage withheld. How do we do that?

[@worldwidequickbooks]

Oh yes ashley, I am working on that video now. It will ask for the final payment of all retainage withheld. Until then, you can send the retention report to the client with a statemnst and a request for payment. When you receive the payment, you can just record it in the deposit window and the account in the window with your bank account will be the retention receivable acount. There is a better way to do this but I'm making the video for that proceedire right now. Basically, you make another item on the items list called "final retention payment". You connect this item to the retention receivable account. When it is time to collect the final retention payment, make an invoice for the cusotmer and put this item on the invoice for the remaining amount of retrention that the cusotemr owes. Creating an invoice will decrease "retention receivable" for that specific clients remaining retention. That amount will be moved to "account's receivable", the main acocunts receivable account that reflects all cleint's balances. So, that invoice is sent to the client torequest the finla payment. When it comes, then the clients balance is zero. -Mark

[@meybernazaros2611]

How do i record retention for invoice that were paid.

[@worldwidequickbooks]

Watch this video; that's how -Mark

[@meybernazaros2611]

@@worldwidequickbooks Thanks for you prompt answer. I watched the video but this video just show invoices open that you can record the amount retention. My question is for those invoices that were paid and close and i did not recorded the retention withheld.