How do we set up QBO for deducting holdbacks from invoices and then once holdbacks are paid?

Hi deb-corpe-fancom,

Welcome to Community!  QuickBooks Online provides the options you need to enter the retainage with peace of mind.  I'll be happy help!

The first step you'll need to take is setting up an account.  Here's how:

1. Select Settings ⚙ in the top right and open Chart of Accounts

2. Click on New

3. Choose Current Assets for the Account Type

4. Set the Detail Type to Retainage

5. Give it an identifiable name

6. Complete additional fields as you see necessary

7. Hit Save when complete

Follow these steps to add the item in your products and services:

1. From the left menu select Sales and then Products and Services

2. Click New and choose Service

3. Enter a Name 

4. In Description, checkmark the box next to I sell this product/service to my customers

5. Choose the Retainage account from the Income Account drop-down

6. When done, hit Save and close

Let's prepare the invoice:

1. Click on +New from the left menu and then select Invoice

2. Choose the Customer from the ▼ dropdown menu

3. Complete the required fields

4. On the second line choose the Retainage item in the Product/Service column

5. Enter the retainage as a negative amount in the Rate column (if it's a percentage, you'll need to calculate this manually)

6. When finished, hit Save and close

That's it!

Feel free to reach back out with any other questions you may have.  We'd be glad to assist!