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Thanks for posting in the Community, treasurer-woodcr!
There are different ways to record your daily sales and commission fees in QuickBooks Online. When you record the deposit for your daily sales, you can add another line item for the commission fees. Enter the commission fees in negative figure so it reduces the deposit amount. That way, you will be able to match the actual deposit amount from your bank.
You can create a service item for commission and select income account. If not sure what income account to use, it is recommended to contact your accountant.
Here's how it looks like when you create the transaction in QBO:
Drop by again in the Community if you have further concerns. I am around to help you.
Thanks but I think we're talking opposite ends of the transaction.
About 2-3 times a year we run a sales event for members of our association. We sell on their behalf, so we collect all the money from sales. We have to then distribute to them their sales less commission.
A theoretical example:
The member gives us 5 items for sale each priced at $20. We charge a commission of 10%
We sell two of their items and collect $40 from the buyer (and return the other 3 items to the member.)
We then have to distribute $36.00 to the member and retain $4.00 commission.
In effect the $36 belongs to the member. We hold it in trust until we pay it to them. I believe I need to hold these funds in a Other-Liability Account.
But I don't get how I do the whole transaction process of paying the member and reducing the liability account.
I hope that makes sense.
I can help you create a liability account to record the whole transaction process of paying the member and reducing the liability account, treasurer.
Since you'd like to hold the funds in a liability account, you can follow the steps below to set up one:
Moreover, I recommend consulting an accounting professional to account for the commission of 10% and sales income distribution with your members. This way, you can receive the best legal advice for your business as we ensure your books are accurate.
Here's an article to learn how to customise your COA: Add an account to your chart of accounts in QuickBooks Online.
Furthermore, you can save this guide for future reference in balancing your QuickBooks and bank or credit card statements: Reconcile an account in QuickBooks Online.
If you have follow-up questions about the process above, let me know by commenting below. I'm always around to help. Have a nice day.
Thanks JamaicaA,
I think I've worked out that I'm best to treat this like a real estate agent collecting rents for a landlord. so the money is held in a "Disbursements" bank account (or in this case in a virtual sub-bank account) with a contra Liability account. The same principle as collecting rents and paying out from out the rent less fees - in this case commission.
The whole thing is also like an art gallery selling an art piece for an artist. They sell the piece on behalf of the artist and take a commission from the sale. The gallery doesn't purchase the item they are only ever acting as an agent, so the money is never the Gallery's and should not ever show as belonging to the gallery.
The crazy thing is I found a reference to exactly this scenario a couple of months ago. It showed the whole process for the transactions. I bookmarked the site but now cannot find the bookmark or the exact same scenario.
Thanks for getting back to us with the detailed information, treasurer.
Yes, you can definitely use a liability account to track the commission amount. To reduce the amount after paying off the commission, you can record an expense transaction and use the liability account in the category detail. Here's how:
In the expense, you can assign the same customer as the invoice, then in the category details assign the Accounts Receivable account, enter the commission amount. Once receiving payment for invoice, you will have an option to link the expense. By doing this, the Accounts receivable will be lessened, and you are able to pay the commission as your liability.
I recommend also contacting your accountant to get more accounting advice on how to properly account you commission to not mess up your books.
Feel free to visit us back here. We will help you the best way we can. Take care!
Hmm, thanks except that I'm not paying the commission, I'm deducting it from the amount owing to the consignor and then paying the remainder as a disbursement. For all intents and purposes imagine that I am the gallery and have collected the money from the purchaser. I only emphasising this in case someone else comes looking and gets confused.
This example: https://quickbooks.intuit.com/learn-support/en-ca/help-article/pay-commissions/track-record-sales-co... is basically what I'm doing except that I won't be using classes. I think I can get away using Tags as I don't need to produce individual reports for consignors and the use of classes there is only about identifying individual consignors for the production of reports - I'm using Essentials and that really is all I need.
I've played around a bit with transactions (and then cancelled them before committing) and think I know how to do it so no need to reply at this stage. My first event will occur in about 4-weeks time and I'll confirm my understanding then. At that point I'll know if I've got it or not.
Thanks everyone for chipping in it did help me think it through.
Hi treasurer,
I agree you can definitely use the tags feature if you don't want to use the class tracking. Furthermore, recording charge sales commission in QBO is a tricky part and depends on the scenario.
As far as specific issues with QB Software, this forum is a great resource to find answers. Many users take a few minutes every day to try to answer questions since it helps others, and you'll find it is a great way to sharpen your skills as well.
Post again in the Community if you have concerns or use the Help menu in QBO and click on Contact us to reach out Chat or Phone support. We'll be around to help. Cheering you to continued success.
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