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Level 1

Commissions Paid - Non Employee

My Client has Quickbooks Plus Online and Quickbooks Online Payments.  


I have a Client who pays commissions to a consultant (non employee) based on the amount of product that is sold.  The Consultant is paid the commission once the invoice has been paid.  I need to set this up in Quickbooks Online and there appears to be several different ways to do this. 


My thoughts - when my client receives a Purchase Order from their client, I need to Credit an Accounts Payable account and Debit COGS.  Then when the invoice is paid I will Debit Accounts Payable and Credit the Bank Account.  


But, when I set the Consultant up as a Vendor, I can't select the COGS account, only an expense account.  Should I create an Expense Account "Consulting Commissions" then create a journal entry to move it to COGS each month?


When paying the Consultant, should I select "Expense" or "Check" from the drop down menu?

1 Comment
QuickBooks Team

Commissions Paid - Non Employee

You've got it right, @areynolds2020.


You'll need to create an expense account for your consulting commission since you can't use an inventory item to track it.


To do so:


  1. Go to Accounting, then Chart of Accounts.
  2. Select New. Then, choose Expenses in the Account Type drop-down.
  3. Enter the other expense details.
  4. Click Save and Close.

About paying your consultant, you can choose a check to record the commission. You can learn more about the journal entry at this link: Create a journal entry in QuickBooks Online.


We also have a guide on inventory assets and cost of goods sold tracking that I'm sure you'll find helpful. It has details to help you with inventory management.


Feel welcome to swing by anytime if you have other questions or concerns. We're always here to assist you further. Thanks for posting and I wish you have a great day ahead.

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