Woodworking Business

You are not logged in. [ Login ] Why log in
(NOTE: Login is not required to post)


Nick Cook Member

Website: http://www.cedarrivercabinetry.com

Hello Accountants,

In using Quick books for invoicing customers, we currently invoice the customer for 50% down and at the end of the job collect the remaining balance. Currently we create an invoice for the 50% and then at the appropriate time create the second invoice. This doesn't seem correct to me. Can I get some input concerning other methods? Thanks for your help.

5/12/15       #2: Accounting ...
David Waldmann  Member

Website: vermonthardwoods.com

I don't use QB, but that seems odd to me. We only create one invoice for every job, and apply deposits/payments against that invoice.

5/12/15       #3: Accounting ...

We do the same as you using quickbooks. We create a progress invoice for 50%, then create the second invoice for balance upon job completion.

5/12/15       #4: Accounting ...

Hi Nick,
I will have to ask my secretary later today, but I believe we create a ESTIMATE, and then do partial payment invoices from that for such things as progress payments or deposits. There are a ton of templates you need to sort through to find the one that shows the info you need on your invoice.

5/12/15       #5: Accounting ...

We do what Mike does, make an estimate first.

5/12/15       #6: Accounting ...
door shop guy

I do estimate first as well...BUT then if i get a downpayment, I will create an invoice then at the end of the job create another final invoice. If i dont make the first invoice then i have nothing to record the payment into.

I am only using Quicken..simple as it gets.
But i am just a one man shop.

5/12/15       #7: Accounting ...
Nick Cook Member

Website: http://www.cedarrivercabinetry.com

Thanks for the input guys. I like the idea of creating one invoice at the beginning and applying payments as the job progresses but wasn't sure if this was a good accounting practice.

5/12/15       #8: Accounting ...
Evan Member

I've thought about doing one invoice with applied payments, but the larger contractors don't like it, and I think it would be hard to make clear how much you were asking for. Plus, what do you do when there is a change order?

I do separate invoices from an estimate, but the tricky part is applying the sales tax so it comes out properly in the reports. If you are lucky you live in a state where you don't have to deal with a sales tax board.

5/12/15       #9: Accounting ...
Jim Conklin  Member

Website: http://www.jhconklin.net


As I understand it, what you are doing with the initial full invoice works no matter what accounting wise (mostly):

Accrual basis - book when sold
Cash basis - book when received

If you have QB set to 'Cash Basis' your initial invoice isn't recorded as income, but the deposit payment is.

If you are keeping books as a percentage-of-completion accounting, you need to invoice on each progress submittal (as on an AIA G702/G703.)

Your accountant can adjust for any cross-overs - if your question is tax based.

If for management reasons, just be aware of any timing differences that your revenue numbers may reflect. (or get a cash-based report from QB).


5/13/15       #10: Accounting ...
David Waldmann  Member

Website: vermonthardwoods.com

I don't think many woodworking or related businesses would pass the test of a cash accounting basis according to IRS guidelines...

Regardless, I guess I don't understand how QB books sales or tracks costs if you can make two "invoices", each for half (or whatever fraction) of the job price. I guess I can see it if you are doing "Job A - $10,000" and splitting it up into two payments, but the accounting would be a bit cumbersome, as noted above (according to accrual basis, revenue is generated upon invoice) and I still don't see how you would be able to track job costs by invoice.

But what if you're selling 10) Item A, 20) Item B, and 100) Item C? How do you remove them from inventory, and book the cost of goods sold against the "Invoice"? Do you just always refer to the Estimate or Quote or whatever you initially generate? Seems odd to have an invoice without actual items on it. But maybe I'm just old school.

With our system we just put a note on the order "X amount due as deposit to confirm order", and the payment is entered into cash receipts and applied to the order as a deposit. The invoice (generated when the order is complete) is still for the full amount, but it shows the deposit and balance due.

On the one or two occasions where someone has insisted on a document that says "Invoice" on it, we've created an item we can "sell" called Deposit. It's set up with the proper GL accounts so that the A/R transactions don't affect sales, and the payment gets applied to the actual order. It's a bit more work than our standard method, but it works.

5/13/15       #11: Accounting ...
Jeff Guthrie  Member

Website: http://www.woodstylellc.com

Once you create an invoice then you're placing that amount as not only income but also you become responsible for the sales tax at that time. We might receive deposit checks several months before we do any work on that project, but by invoicing it you would be responsible anyway. Even worse would be if you create an invoice for a deposit in December but don't build the job until after the new year. Then that money shows up as income without any expenses. I click the receive payment button without an invoice, enter the amount, Quickbooks will ask if you want to print a credit memo, then the customer has a receipt. When we build the job I create an invoice and then click the apply credits button.

5/14/15       #12: Accounting ...

We have an account called "Customer Downpayments." It's a liability account. For downpayments we create a line on an invoice using this account, and all the customer would see is, for example, "Downpayment on Kitchen cabinets," "$5000.") Progress payments, if used, are down the same. At the final invoice, we would have a line item of the quoted amount. For example, "Kitchen Cabinets", "$10,000." Then a line for any down/progress payment, showing a negative number. That line backs the amount out of the Customer Downpayments liability account. This way, the customer sees the total price and all payments. And accounting comes out correct.

If we do a retainer, which is noted on the quote as non-refundable, we usually still handle it the same way. We would just not ever give it back. Never had an issue though.

5/30/15       #13: Accounting ...
Skillet Member

Ranliker is correct. In QuickBooks, do a search for "Recording an upfront deposit or retainer as a liability" and it will walk you through it. This will give you the most accurate view of your financials. I never liked having a deposit sitting in my account for work I hadn't done yet. Gave me a false sense of security.

  • Post a Response to this thread
  • notify me of responses to this topic
  • To receive email notification of additions to this forum thread,
    enter your name and email address, and then click the
    "Keep Me Posted" button below.

    Please Note: If you have posted a message or response,
    do not submit this request ... you are already signed up
    to receive notification!

    Your Name:
    E-Mail Address:
    Enter the correct numbers into the field below:

    Date of your Birth:

    Return to top of page

    Buy & Sell Exchanges | Forums | Galleries | Site Map

    FORUM GUIDELINES: Please review the guidelines below before posting at WOODWEB's Interactive Message Boards (return to top)

  • WOODWEB is a professional industrial woodworking site. Hobbyist and homeowner woodworking questions are inappropriate.
  • Messages should be kept reasonably short and on topic, relating to the focus of the forum. Responses should relate to the original question.
  • A valid email return address must be included with each message.
  • Advertising is inappropriate. The only exceptions are the Classified Ads Exchange, Machinery Exchange, Lumber Exchange, and Job Opportunities and Services Exchange. When posting listings in these areas, review the posting instructions carefully.
  • Subject lines may be edited for length and clarity.
  • "Cross posting" is not permitted. Choose the best forum for your question, and post your question at one forum only.
  • Messages requesting private responses will be removed - Forums are designed to provide information and assistance for all of our visitors. Private response requests are appropriate at WOODWEB's Exchanges and Job Opportunities and Services.
  • Messages that accuse businesses or individuals of alleged negative actions or behavior are inappropriate since WOODWEB is unable to verify or substantiate the claims.
  • Posts with the intent of soliciting answers to surveys are not appropriate. Contact WOODWEB for more information on initiating a survey.
  • Excessive forum participation by an individual upsets the balance of a healthy forum atmosphere. Individuals who excessively post responses containing marginal content will be considered repeat forum abusers.
  • Responses that initiate or support inappropriate and off-topic discussion of general politics detract from the professional woodworking focus of WOODWEB, and will be removed.
  • Participants are encouraged to use their real name when posting. Intentionally using another persons name is prohibited, and posts of this nature will be removed at WOODWEB's discretion.
  • Comments, questions, or criticisms regarding Forum policies should be directed to WOODWEB's Systems Administrator
    (return to top).

    Carefully review your message before clicking on the "Send Message" button - you will not be able to revise the message once it has been sent.

    You will be notified of responses to the message(s) you posted via email. Be sure to enter your email address correctly.

    WOODWEB's forums are a highly regarded resource for professional woodworkers. Messages and responses that are crafted in a professional and civil manner strengthen this resource. Messages that do not reflect a professional tone reduce the value of our forums.

    Messages are inappropriate when their content: is deemed libelous in nature or is based on rumor, fails to meet basic standards of decorum, contains blatant advertising or inappropriate emphasis on self promotion (return to top).

    Libel:   Posts which defame an individual or organization, or employ a tone which can be viewed as malicious in nature. Words, pictures, or cartoons which expose a person or organization to public hatred, shame, disgrace, or ridicule, or induce an ill opinion of a person or organization, are libelous.

    Improper Decorum:   Posts which are profane, inciting, disrespectful or uncivil in tone, or maliciously worded. This also includes the venting of unsubstantiated opinions. Such messages do little to illuminate a given topic, and often have the opposite effect. Constructive criticism is acceptable (return to top).

    Advertising:   The purpose of WOODWEB Forums is to provide answers, not an advertising venue. Companies participating in a Forum discussion should provide specific answers to posted questions. WOODWEB suggests that businesses include an appropriately crafted signature in order to identify their company. A well meaning post that seems to be on-topic but contains a product reference may do your business more harm than good in the Forum environment. Forum users may perceive your references to specific products as unsolicited advertising (spam) and consciously avoid your web site or services. A well-crafted signature is an appropriate way to advertise your services that will not offend potential customers. Signatures should be limited to 4-6 lines, and may contain information that identifies the type of business you're in, your URL and email address (return to top).

    Repeated Forum Abuse: Forum participants who repeatedly fail to follow WOODWEB's Forum Guidelines may encounter difficulty when attempting to post messages.

    There are often situations when the original message asks for opinions: "What is the best widget for my type of shop?". To a certain extent, the person posting the message is responsible for including specific questions within the message. An open ended question (like the one above) invites responses that may read as sales pitches. WOODWEB suggests that companies responding to such a question provide detailed and substantive replies rather than responses that read as a one-sided product promotion. It has been WOODWEB's experience that substantive responses are held in higher regard by our readers (return to top).

    The staff of WOODWEB assume no responsibility for the accuracy, content, or outcome of any posting transmitted at WOODWEB's Message Boards. Participants should undertake the use of machinery, materials and methods discussed at WOODWEB's Message Boards after considerate evaluation, and at their own risk. WOODWEB reserves the right to delete any messages it deems inappropriate. (return to top)

  • Forum Posting Help
    Your Name The name you enter in this field will be the name that appears with your post or response (return to form).
    Your Website Personal or business website links must point to the author's website. Inappropriate links will be removed without notice, and at WOODWEB's sole discretion. WOODWEB reserves the right to delete any messages with links it deems inappropriate. (return to form)
    E-Mail Address Your e-mail address will not be publicly viewable. Forum participants will be able to contact you using a contact link (included with your post) that is substituted for your actual address. You must include a valid email address in this field. (return to form)
    Subject Subject may be edited for length and clarity. Subject lines should provide an indication of the content of your post. (return to form)
    Thread Related Link and Image Guidelines Thread Related Links posted at WOODWEB's Forums and Exchanges should point to locations that provide supporting information for the topic being discussed in the current message thread. The purpose of WOODWEB Forums is to provide answers, not to serve as an advertising venue. A Thread Related Link that directs visitors to an area with inappropriate content will be removed. WOODWEB reserves the right to delete any messages with links or images it deems inappropriate. (return to form)
    Thread Related File Uploads Thread Related Files posted at WOODWEB's Forums and Exchanges should provide supporting information for the topic being discussed in the current message thread. Video Files: acceptable video formats are: .MOV .AVI .WMV .MPEG .MPG .MP4 (Image Upload Tips)   If you encounter any difficulty when uploading video files, E-mail WOODWEB for assistance. The purpose of WOODWEB Forums is to provide answers, not to serve as an advertising venue. A Thread Related File that contains inappropriate content will be removed, and uploaded files that are not directly related to the message thread will be removed. WOODWEB reserves the right to delete any messages with links, files, or images it deems inappropriate. (return to form)
    • Vexor Custom Woodworking Tools, Inc.
      Custom and Standard Router Bits, Shaper Cutters, Profile Knives, Multi Profile Insert Tooling and More
    • Impact Search and Placement
      Professional Employment Recruiting Specialists
      The Ultimate Spoilboard - ULTI-BOARD - Specifically Engineered and Formulated for the Ultimate in Spoilboard Performance - Not Your Ordinary Sheet of MDF.
    • 2020 Manufacturing Solutions
      Manufacturing Software Solutions Including an Offering Designed For Cabinetmakers, In Addition to Furniture, Architectural Millwork and Other Wood Product Manufacturers We Support
    • Rico CNC Parts and Tools
      CNC Router Spare Parts, Vacuum Pods and Rubber Pads, Tool Holder Clips, CNC Woodturning Tools, Edgebander Replacements, Beam Saw Accessories
    • Better Vacuum Cups, Inc.
      Vacuum Cups for All CNC Routers As Well As Many After Market Parts for Your CNC
    • Cabinetshop Maestro
      Web-Based Project Management Software for Custom Cabinet Shops - Manage Jobs from Prospect to Punchlist Through Scheduling, Task Management, Time Tracking and Communication
    • WoodJobs.com Search Consultants
      Free Employment Service for Woodworking Related Job Seekers
    • EnRoute Software
      CAD CAM Software by SAi Featuring 2D/3D Design and Toolpath Functions, Nesting, Rapid Texture and More, with Low-Cost Monthly Subscriptions Available
    • Macoser Inc
      Exclusive Importer of European Woodworking Machinery Since 1988
    • TradeSoft
      Seamless Management Software to Improve Estimating, Job Costing, Scheduling, Purchasing, Shipping, and Shop Floor Data Collection
    • NEMI
      Products For CNC Machines - Digitizers, Tool Setters, Vacuum Pods, Vacuum Cups, Vacuum Tables, Vacuum Chucks and Software
    • TradeJobPlacement.com
      Individualized Placement Services, Specializing in Millwork Design Engineers

    Become a Sponsor today!