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Anonymous
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Taking a credit card payment from a patient for a sub-contractor but only keeping a small portion of payment

We are a small clinic that uses a self-employed sonogram tech as a service to our patients.  We take credit card & cash payments from patients for sonogram services but keep only a small portion and give a large portion to the sonogram tech in cash.  Of course, this causes discrepancies in our income.  How should I set this up in Quickbooks so that the patient gets an invoice receipt for sonogram payment and our income is correct?

5 Comments
Anonymous
Not applicable

Re: Taking a credit card payment from a patient for a sub-contractor but only keeping a small portion of payment

The likely first thing to so is to stop paying the tech in cash.

- If they are a 1099 contractor, wait until they submit a bill for hours (and other expenses?) to you and then pay them with a check from your bank account.

- If they are an employee, then pay them with a paycheck that has all of the proper taxes withheld.

Level 15

Re: Taking a credit card payment from a patient for a sub-contractor but only keeping a small portion of payment

You can pay in cash, but this is your Misunderstanding: "but keep only a small portion and give a large portion to the sonogram tech in cash.  Of course, this causes discrepancies in our income."

 

If the Tech bills you for $50 and you charge the Patient $80, that $80 is your Gross Revenue.

 

Then, you use Check Entry, against the Cash Bank, and the payee is the Tech; You enter the Expense as Subcontractor Labor Expense.

 

You seem to be jumping to the Net. But you are supposed to be tracking everything in full = Gross. You make a sale, the Gross is $80. You have a direct Expense of $50.

 

And your P&L, at the bottom, shows the Net of $30 for Net Income or Profit.

 

You get a W9 from that technician. You report these payments on the 1099-Misc. Paying in Cash is fine. Tracking is what matters.

Anonymous
Not applicable

Re: Taking a credit card payment from a patient for a sub-contractor but only keeping a small portion of payment

Thank you for your reply.  I have one more issue that relates to this and that is that the clinic requires a $25 deposit for a sonogram appointment.  The clinic and the sub-contractor-sonogram-tech split this amount if the patient is a no-show.   Please explain how this should be done in Quickbooks.  Thank you. 

QuickBooks Team

Re: Taking a credit card payment from a patient for a sub-contractor but only keeping a small por...

Hi there, LLoop.

 

You've come to the right place. Handling upfront deposits is one of my specialty, so let me lend you a hand in recording this in QuickBooks.

 

There are a couple of things we'll need to prepare before recording deposits. We'll need to set up an Other Current Liability account (retainer account) and an upfront deposit item. Let me walk you through the steps on how to do them.

 

To Create an Other Current Liability account:

  1. From the Lists menu, select Chart of Accounts.
  2. Right-click anywhere on the Chart of Accounts window, then choose New.
  3. Select Other Current Liability for the account type.
  4. Enter a name for the account. For example, Upfront Deposit.
  5. Click OK.

To Create an Upfront Deposit item:

  1. From the Lists menu, select Item List.
  2. At the lower-left portion of the page, click the Item drop-down menu and choose New.
  3. In the Type drop-down menu. select either Service or Other Charge.
  4. Enter a name for the item.
  5. Click OK.

Now that we've got everything ready, let me show you how you can record the $25 deposit:

  1. From the Customers menu, select Enter Sales Receipts.
  2. Choose the correct customer and payment method.
  3. Fill in the relevant information like the Date and Sale No.
  4. Under the Item column, make sure to enter the Upfront Deposit item
  5. Enter the correct Amount.
  6. In the Deposit To field, select the correct bank account.
    - If you don't see this, the fund will go to your Undeposited Funds account and can be deposited later.
  7. Click Save & Close.

From there, if the customer doesn't show up for the appointment, you could write a check for your sub-contractor to provide them their portion of the deposit. That's it! For additional insight about this, I recommend following this article: Manage upfront deposits or retainers

 

Please know that I'm only a post away if you need additional assistance. I'm always here to provide help and answer any questions that you may have. Wishing you and your business all the best!

Level 15

Re: Taking a credit card payment from a patient for a sub-contractor but only keeping a small por...

There is no Liability or prepayment accounting for this situation: " The clinic and the sub-contractor-sonogram-tech split this amount if the patient is a no-show.   Please explain how this should be done in Quickbooks. "

 

It's the same thing already reviewed, in that you got Gross Revenue when you got the amount, and if you pay anything out, that is the expense side of the activity. For the Sonogram prepayment, that is an item linked to income and expense. You can name it Sonogram Deposit, but it is Income for you, because you Keep it or apply it to their actual charge. So, this is an Other Charge type item linked to Income. Use that on a Sales Receipt. If they are a no-show, you use that same item to Pay the subcontractor. If the patient shows, you list your regular Sonogram item on an Invoice for the full amount they owe. Put the prepayment Sonogram item on a credit memo for this same date and use the icon at the top to apply it to the invoice. Now the Difference is shown as still owed.

 

Everything that is part of Operational Activity like this, such as Sonogram, or any other office procedure, is done using Two Sided items, if you incur it and charge it = both activities need to be provided for. You can be as generic as:

Service item linked to Subcontractor Expense and the Revenue for anything you charge, then pay the other provider

 

Or, different Service items, such as "Wellness check" vs "Sonogram".

 

Please see my attachment.

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