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bbay
Level 1

Customer refunds

My shop is a shared storefront where my members (small businesses) pay either a monthly membership fee or commission % on each sale to have their products in the shop - I manage the sales through a separate POS system, which deposits the daily chunks of income into QB (auto rule into POS Undeposited Income account).

 

At the end of the month I record the sales of each member business, and create a QBO journal entry to debit the POS Undeposited Income account and credit each of the following a portion: Pass through To Member (liability - total sales that go back to them), Income (for my own inventory), and Sales Tax Pass Through.

 

All members are set up as customers (this is the service I provide them), and each month I remit payment to them of their gross sales less sales tax, less transaction fees, and less commission or membership fees. I do not have them set up as Vendors, because they do not receive 1099s from me.

 

Here's my question: Which QB recording method should I use to issue each member a check for their sales?

 

I do not want to record any of the sales remittance as Expenses, because they really are just a Pass through Liability, similar to taxes. A refund Receipt seems to make sense, marking their total sales as a positive and a negative taxes and membership fees. But if their fees that month are more than their sales, I would need to use an invoice. Is there a better way to do this?

2 Comments
Rustler
Level 15

Customer refunds

 

I did something similar to this, but tracked things differently

My POS reported sales by department, a department number was assigned to each member.
Members were set up as vendors

 

the full amount of retail sales posted to income, and QB calculated sales tax due

 

then a bill was created for each member
consignor expense, and their amount of retail sales, non taxable,
During the pay period, just add another line to the bill including the date of sale

When it comes time to pay out
on the next line(s) under expenses list your fee income account, transaction fees, etc as negative numbers
pay the balance

 

If the bill goes negative, they owe you money. But QB will not allow for a negative amount as a bill. So adjust the negative amounts you entered to end up with a zero dollar bill. Note the total you had to adjust off the bill

set the member up as a customer if needed, invoice them for the short fall.

bbay
Level 1

Customer refunds

That makes a lot of sense to set it up as a bill to members as vendors, and adjusting the negative as needed. The only thing here is that it will show as an expense on the P/L, rather than an asset or liability - did you consider the effects of that from an income tax perspective or from a lending viewpoint when they specifically look at your income versus expenses?

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