paying a vendor who pays another vendor

kvielmo1 · ‎February 09, 2023

Hello! I have a rental property in Puerto Rico. I recently hired a small company, ABC, to help me finalize items in the rental to get it ready for renting. I use QuickBooks Online.

1) Last week ABC invoiced me $3,000 as a downpayment to start some air conditioning work. ABC then hired a company to do the installation. *How do I categorize this initial $3,000 to ABC in QBO?

2) Because I needed to pay quickly, I paid via Paypal and ABC added a 3% surcharge, so the $3,000 downpayment above was actually $3,090. *How do I categorize this $90 fee that ABC charged me to cover their Paypal transaction fee? Or is it necessary for me to worry about it?*

3) ABC also charges me 15% above what any vendor charges it. For example, ABC hired a plumber to look at a leak. ABC paid the plumber $110, and then I will receive an invoice from ABC for a) $110 (cost of the plumber) + $16.50 (ABC's fee for this work, or 15%) + likely $3.80 for a Paypal processing fee. In total, this $110 plumber bill will probably cost me $130.30, which is totally fine! *How do I categorize this $130.30 payment in QBO?*

4) ABC went to Home Depot and purchased a washer/dryer for us. ABC used our Home Depot card. I will get an invoice likely for 15% of the washer/dryer cost for ABC's service fee.

5) I'm also worried about tracking payments to ABC for 1099 requirements. But maybe I'll wait and figure that out later.

I know that was a lot, but if people have any insight into any of these transactions, I'd appreciate it!

Thanks,

Kelly

JamaicaA · ‎February 09, 2023

Congratulations on your rental property pursuit and thank you for choosing QuickBooks as your business tool, @kvielmo1. I'm here to address your queries individually, starting from recording the invoices up to setting up ABC as your vendor in the program.

If you'd like to track all expenses, you can create different categories for them. You can also create one to combine the service and fees. For instance, select a category expense for the airconditioning work, surcharges, processing fees, and other expense.

For the 3% surcharge from Paypal processing fees, we can record this as bank fees. To start, create a service item and add the fee as an additional line item on your invoice.

Moreover, you can check these articles for future reference. It provides insights about recording customer's payments and making deposits in QBO:

Lastly, I've got your back when tracking their related payments to ABC for 1099s. All you have to do is to add them as vendors through payroll, so they're automatically eligible for 1099s. You can read about setting up contractors and tracking them for 1099s for the complete details.

Furthermore, I highly recommend seeking your accountant's help to record these transactions properly. This way, we can ensure the accuracy of your accounts.

Let me know if you need more help managing your invoices and vendors. I’ll be around to help you anytime. Keep safe and have a great week ahead!

Rainflurry · ‎February 09, 2023

@kvielmo1

When you record the $3,000 payment for the downpayment, assign it to Accounts Payable. That will book the $3,000 as a credit that you can apply to future bills from ABC.

Also, it's unnecessary to break out the costs for PayPal fees, etc. on the bills from ABC. All of those costs can be rolled into your maintenance expenses (assuming that's what they are).

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