I run a trucking company and I am paying for the contractor’s fuel costs and insurance costs due to discounted rates received. Additionally, I also deduct a fee based on their earnings for work done. For instance, if they were to earn $100 for a job, I take a fee of 3% and keep $3 as revenue for dispatching.
I wanted to know how to book a journal for this. When I pay the contractors, I deduct the expenses (fuel, insurance, and dispatch fee) from their pay so that I get reimbursed for this expense. Additionally, the expenses are paid from my credit card, so I see the expense hit within the month of payment. I understand need to book a journal to credit the expense that is on my P&L so that I see a better picture of my true expenses, but I am struggling with the remainder of the journal.
Hi @Akaur , thank you for joining quickbooks community. You could entry prepaid expense for fuel and insurance cost (dr prepaid expense for fuel or insurance cost, cr cash). Prepaid expense is an asset account. Then, after the income earned, make the prepaid expense as expense ( dr expense for fuel/insurance, cr prepaid expense for fuel/insurance), and record the income (dr cash $97 dispatching expense $3, cr income $100). Comment back for follow up questions. Have a good day.
@gayatriluthfias20Thank you for the reply, just so I understand, I have come up with an example:
Paid for Fuel: $50; Contractor earned $100; Commission $3; Gross earned by contractor 150m (meaning their 1099 will have the full amount listed as the income regardless of cash payment)
Payment with CC:
DR Prepaid Expense $50
CR: Cash $50
Paying the Contractor:
DR: 1099 Contractor $150
CR: Dispatch expense $3
CR: Prepaid expense $50
CR: Cash $97
The dispatch expense technically isn't an expense account, it is more so the fee I withhold for my work. I don't think this is revenue necessarily because I record the full revenue when I bill the 3rd party for the contractor’s work (when the load is completed).
Did you get an answer to this? I am on the other side of this scenario as the contractor. I am being charged a 30% dispatching fee. For Example:
My Revenue for this week is $100. My dispatcher will charge me a 30% fee, along with my weekly insurance that is paid directly through the dispatcher ($10). My net will be (100 - 30 -10 ) $60.00. I know that I need to report my sales in quickbooks as $100. But how do I account for the "dispatching fee" and insurance in quickbooks? How can I match the direct deposit of $60.00 with the $100.00 in sales?