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Quickbooks & MYOB – Retentions and How to Enter

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Quickbooks & MYOB – Retentions and How to Enter

Quickbooks & MYOB
Retentions and How to Enter

Client emailed asking how to enter retentions and whether GST is on the 10% retained.

Retentions are common in the building industry, and are a safe-guard for the purchaser who holds back say 10% of payment on a job, often up to 12 months, like an insurance in case there is a problem with the work performed by the contractor.

Keep the GST code on all lines and invoices – it applies at any stage and on retentions when due.

To enter in your books you can do it several ways:

  1. Invoice for the full amount of the job or final installment. On the next line of the invoice, raise -10% (or as applicable) and allocate that to an Asset account called something like Retentions. If you are using items, create the item ‘Retentions” and link it to the Retention Asset account. This account will be a record of what you are owed, like a debtors account. The invoice will then have a balance of 90% due.
  2. Or you could invoice the full 100% and send to the payor. When they pay 90% (short the 10% for retention) the invoice will be left open in accounts receivable reports. Sometimes this is preferred.
  3. As in 2 above, with 90% left after payment, you could adjust the invoice to the 90% amount and it will be closed, then raise another invoice for the 10% retention amount either now or in 12 months time when it is due.
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Author: accountkeepingplus

Administration, bookkeeping and compliance for small business, and Self-Managed Super Funds (SMSF) Training, trouble-shooting, or we can do the books and payroll for you! Self Managed Superannuation Fund Service Provider, Free support MYOB Certified Consultant, Reckon/QuickBooks Professional Partner.

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