One of the things I love dearly about QuickBooks® Desktop is the Group Item function, and I’ve sorely missed this feature in QuickBooks Online (QBO). Now, I rejoice! The QBO development team has released the “Bundles,” and they work very similar to QuickBooks Desktop Group Items (a big shout out to Rafal Bolinski and Richard McCann for letting me have a sneak peek).
I’m going to show you how to use QBO Bundles to track a sale, and a vendor commission for that sale, at the same time. Note: This does not work for employee commissions.
If needed, create an Income Account to track your Bundle by going to Gear Icon > Account and Settings > Chart of Accounts > New.
If needed, create an Expense Account or Cost of Goods Sold Account to track the vendor expense by going to Gear Icon > Account and Settings > Chart of Accounts > New.
Create a Liability Account to track the vendor commission that is owed by going to Gear Icon > Account and Settings > Chart of Accounts > New. NOTE: You’ll want this to be an Other Current Liability, and you’ll need one for each vendor to whom you pay commission (i.e. Vendor Name 01 Commission Owed, Vendor Name 02 Commission Owed).
If you don’t already have one, create the item(s) for which your vendor is earning commission by going to Gear Icon > Products & Services > New. Make sure you point this to the proper Income Account. Your item will either be Inventory, non-inventory or service, depending on what you’re selling, so choose they item type as needed.
Now, while you’re still in the Products & Services list screen, create a new SERVICE item to track the vendor expense. Rather than an Income Account from your Chart of Accounts, you’ll choose the Commission Expense account you created. Click Save and New when you’re done because we have a few more items to create.
The next item to create is the SERVICE item to track the vendor commission owed/liability. If you have more than one vendor for which you need to track commission owed, name them accordingly, as you did the Liability Account(s) (i.e. Vendor Name 01 Commission Owed, Vendor Name 02 Commission Owed, etc). In the Income Account drop down, choose the corresponding Liability Account. Click Save and New when you’re finished with all of them – we have one more item to add!
Now, we get to create a new BUNDLE item. Just as you needed a liability account and commission owed item for each vendor, you’ll also need a separate bundle item for each vendor. The description on this item is what the client/customer will see, so I generally copy/paste the description from the actual item sold. We’ll be using this item to track what you’re selling, the vendor commission expense and the commission owed, so add each of those in the the list under “Products/services included in the bundle,” and the quantity for each should be: Sale item: 1, Commission Expense Item -1, Commission Owed Item: 1.
NOTE that the price you set up for each will follow into this item. For the expense and liability item, I leave the price blank when I set each of those up. Also, if you have a flat commission on the sales, you can make the quantity in the bundle components reflect that – instead of -1 for expense and 1 for liability, you can enter -0.1 and 0.1, respectively, to reflect a 10% commission.
Make sure you DO NOT check the box next to “Display bundle components when printing or sending transactions.” We don’t want the client to see how we have our items handling all of the behind-the-scenes work for us!
Now, we can add the bundle to a sales form! Below, you see that I’ve added the bundle item created from all of the previous screen shot setups.
The actual Service that I’m selling has a sales price of $1000, so in the expense & liability lines, I entered the quantity to calculate a 10% commission (-.1 for commission expense, .1 for commission owed), and in the rate column, I entered the total of the service being sold.
The expense and liability cancel each other out, leaving the invoice total to correctly reflect the services my company is selling.
One super cool thing here is that you can substitute any other product or service that you’re selling. So, you can use the vendor specific bundle item for ANY product or service you’re selling – you just change it out using the drop down, when you enter the invoice or Sales Receipt:
After we hit save and send on that invoice, this is what our client/customer sees. Just the description of the services we sold them and the total. Yay!
The Profit and Loss accurately reports our income of the services and the expense of the vendor commission:
Our Balance Sheet now shows how much we owe our vendors in commissions. At the end of the month, we’ll look at the balance in the “Commission Owed” account, so that we know how much to pay the vendor. In the case, we need to enter an expense transaction, or a check for $100 to zero out the account.
Last step in the process: we pay the vendor the commission we owe them for all the sales!
Now, you can track simple vendor commissions in QBO, without needing a third party app. BAM!