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Lixyi
Level 1

Receiving payments that includes expense

Hello,

 

I am new to quickbooks and I am struggling on categorizing with a certain type of payment as I am not sure how to allocate it. I am a document preparer so when clients pay me they pay my fees along with the fees (most of the time) they need to pay for the services. For example opening up a business for the client, they will include my fee along with the fee that needs to be paid for the annual report. So I will pay from my bank the fee to the state for the annual report. What category would I put the fee of the annual report. Would that be under Licenses expense? Any advice is welcome.

 

Thank you in advance 

1 Comment 1
AccountantDave
Level 4

Receiving payments that includes expense

"Licensing Expense" is an appropriate income statement expense account to use. You have flexibility in how you want to record revenue and expenses, but in general it would work the same as utility expense, office supply expense, etc. Since the revenue you get from the client  just passes through your business, you may research contra accounts but that is a bit higher level (kinda). Basically it reflects the nature of that revenue as not actually being revenue.

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