QB Issue Resolution:

This is the incorrect treatment of receiving a prepaid from a customer from accounting standpoint.  Prepaid is an advanced payment for a service to be provided. When you receive a prepaid from the customer before providing services, it is a liability. Therefore, it should be booked to a payable account. Due to the limitation of Quickbook Online, you will have to offset the prepaid manually when issuing an invoice.

Resolution for Issue 'What is the best way to record a customer prepayment and deposit? I’m a home improvement contractor and my customers give me a deposit before work begins that is typically non-refundable. Also on larger projects they pay me as work is progressing.' available: Yes (Solved).
Source: Intuit Community forum.

What is the best way to record a customer prepayment and deposit? I’m a home improvement contractor and my customers give me a deposit before work begins that is typically non-refundable. Also on larger projects they pay me as work is progressing.: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.

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