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Proper way to track payments for a sold business

Forum|Forum|8 months ago
December 22, 2025
3 replies
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Hello,

A couple of years ago, I sold part of my business that is being paid for in monthly installments. Not knowing any better, I created an invoice for the total amount of the sale, and then each month I send the buy the updated invoice that has tracked all the payments and interest added.

The problem is, that in my P&L reports for the year, it shows the total amount of the sale rather than the amount that was paid that years. For income tax purposes, I can easily do the math, but I was wondering if there is a better way to have QuickBooks track this sale.

Thanks in advance.

QuickBooks Desktop

Best answer by TrixieD

Hi customer, timberline.

I understand that you are seeking clarification on how to record the sale of a portion of your business that is being paid for in installments. While I can provide some technical options for recording this, I highly recommend consulting an accountant or bookkeeper to ensure accuracy in your financial records.

One option is to use Progress invoicing. With this method, you start by creating an estimate for the total sale amount. Then, you generate invoices in portions according to the installment payment schedule. This approach is ideal as only the invoiced amounts are reflected in the Profit and Loss (P&L), ensuring accurate income reporting.

Another option is to create an invoice for the total sale amount, as you've already done. Then, record payments in portions or partial amounts based on the installment payment schedule. This method is ideal if your reporting method is on a cash basis. Refer to the article on Cash vs. Accrual accounting for more details.

In relation to your scenario, the Accrual accounting method reports the total sales on the Profit and Loss statement at the time of the sales transaction. This explains why your P&L reflects the full sale amount, regardless of the installment payments.

Once again, your accountant or bookkeeper is the best resource for determining the most appropriate method to record your sale. If you have additional concerns, feel free to return to this thread for further guidance.

T

TrixieD

Answer

QuickBooks Team

Hi customer, timberline.

I understand that you are seeking clarification on how to record the sale of a portion of your business that is being paid for in installments. While I can provide some technical options for recording this, I highly recommend consulting an accountant or bookkeeper to ensure accuracy in your financial records.

One option is to use Progress invoicing. With this method, you start by creating an estimate for the total sale amount. Then, you generate invoices in portions according to the installment payment schedule. This approach is ideal as only the invoiced amounts are reflected in the Profit and Loss (P&L), ensuring accurate income reporting.

Another option is to create an invoice for the total sale amount, as you've already done. Then, record payments in portions or partial amounts based on the installment payment schedule. This method is ideal if your reporting method is on a cash basis. Refer to the article on Cash vs. Accrual accounting for more details.

In relation to your scenario, the Accrual accounting method reports the total sales on the Profit and Loss statement at the time of the sales transaction. This explains why your P&L reflects the full sale amount, regardless of the installment payments.

Once again, your accountant or bookkeeper is the best resource for determining the most appropriate method to record your sale. If you have additional concerns, feel free to return to this thread for further guidance.