Entering income

I'm here to help you properly record your Sales Commission in QuickBooks Desktop, @ginasanchez.

You can create a sales receipt to record this commission as an Income. Once done, you can make a deposit to show the transfer of funds to your personal bank account.

To create a sales receipt to record this commission as an Income:

1. Go to the Customers menu and click on Enter Sales Receipts.
2. Provide all the necessary information about this commission.
3. Click Save & Close.

Once done, make a deposit to transfer the funds to the personal bank account:

1. Go to Banking menu and choose Make Deposits.
2. Select the personal bank account as the Deposit To bank account.
3. Enter the details of the deposit.
4. Click Save.

Here's more information on how to create sales receipts and on how to record and make bank deposits in QuickBooks Desktop. 

You can also check this article for more information about the money moving in and out of your business and bank account: Track your cash flow in QuickBooks Desktop.

This should allow you to keep tracked of your Sales Commission as Income. If you have other concerns or follow-up questions in recording this as an income, let me know below. Keep safe and enjoy the rest of the week!

My issue with entering a deposit for the amount is that the amount was never officially deposited in such a way that would it would match the amount of the commission. For example - he received a commission amount for $5014.27 in his PERSONAL account, but he did not turn around and deposit that exact amount of money into the business account right away. He deposits little amounts of money at a time that come from these deposits over different days in the future. There is never a deposit that shows $5014.27 even though he did officially earn that on commission.

Is he hurting his business by not depositing the money in exact dollar amounts from the commissions?

I am afraid if I make an invoice it will never match the deposits exactly, so the invoice may never get totally paid. There will always be a balance showing they owe when they don't. I don't now if he is depositing the whole commission to the business account.

Thanks for getting back to us, @ginasanchez

Mixing your personal and business funds and expenses isn't highly advisable. Let me share some information to help you accurately tracked your expense transactions.

You can create a journal entry to your income and equity account to keep track of the amount deposited to personal funds. Let me guide you how:

To set up the equity accounts.

1. Go to Lists and choose Chart of Accounts.
2. Click the Account button below and select New.
3. From the Account Type ▼ drop-down, click Equity.
4. From the Detail Type ▼ drop-down, find Owner's Equity or Partner's Equity depending on your situation.
5. Then Save and Close.

Then create a journal entry.

1. Go to the Company menu and select Make General Journal Entries.
2. On the first line, select the expense account for the purchase.
3. Put the purchase amount in the Debits column.
4. On the second line, select Partner's equity or Owner's equity.
5. Enter the same purchase amount in the Credits column.
6. Click Save and close.

However, I'd suggest consulting an accountant. They can guide you on what accounts should be used and provide more expert advice in dealing with this concern to ensure your book is accurate.

For more insights about managing accounts and recording deposits in QuickBooks Desktop, you can refer to these articles: 

• Create, edit, or delete an account in QuickBooks Desktop.
• Record and make bank deposits in QuickBooks Desktop

Fill me in if you have any other questions in QuickBooks Desktop. I'll be always around here in the Community to lend a hand.

Thank you @JoesemM  - the first part of your reply "To set up the equity accounts" sounds like it is a solution that is going down the track I need. I understand that part. I am not understanding the part about creating a journal entry because I don't believe there are any expenses associated with the entry I need to make. I only want to enter income and there were no purchases.

I have a similar scenario. I am a sole trader, running a small online store that receives sales income to my business account - that part is simple. This business account is linked to QBO and recording transactions is easy enough from the bank feed.

However, I also do freelance work and that income gets paid into my personal account (I will change this to my business account for the future to make my life easier). That money never directly gets paid to my business account, I keep in my personal account and use as normal income. (Occasionally I make small owner contributions, but that comes through in my bank feed to be recorded)

So, if I make 10 sales receipt for the say, 10 deposits I received over the FY into my personal account, and then 'deposit' them, that would work? It never got 'deposited' from my business account to my personal account but still technically my business received it.

Lastly, if I create some sales receipts and later realise this isn't the best way to record it, how hard is it to undo this? :)

TIA

Hi, I have a similar questions and found this thread when searching.  Hope someone can help....especially as March 15 is looming.  

2021 I am a brand new business.  I have income that comes in January-April but I don't establish QB and my business bank accounts until May.  Starting in May I record income and reconcile it with my business bank accounts.  I want to record the income I received from January-April for an accurate accounting of how much I received and is documented on the 1099 (the 1099 is the entire income from January-December under my business EIN).  January-April income went into my personal account.   Will the method you describe work or should I do it another way.  Thank you

Hi there, NHR.

Allow me to show you how to properly record these transactions in QuickBooks Desktop. 

You can use an equity account to record the amount deposited to personal funds. You can follow the steps by my colleague @JoesemM on how to set up equity accounts in QuickBooks Desktop.

Then, create a journal entry or transfer the funds from an equity account to a bank account

Here's how:

1. Go to the Company menu and select Make General Journal Entries.
2. Select the appropriate expense account in the first Account column.
3. In the Debit column, type in the amount of the transaction. You can select the customer from the Name drop-down.
4. Choose Partner's equity or Owner's equity. in the second Account column.
5. Tap Save and Close.

Also, I can see that this article can be helpful for you to understand the chart of accounts in QuickBooks.

Just reply back to the thread if you have other questions about this or with QuickBooks. I'm always willing to back you up. Take care always.

Hi @LeizylM,

Are your instructions and those above from @JoesemM the same for Quickbooks Online? I have an almost identical problem I'm trying to solve. And, do you have a good link for how to show business expenses paid from the personal bank account (and/or credit card) before the business accounts were created?

Thanks in advance!
E

Our company contracts with a larger company. We invoice them and they pay the invoices on a settlement. They also deduct various expenses from the settlement amount. So the problem is when I enter payment for the invoices, the actual payment amount is always less. How do I record this information accurately?

I’m hoping in on the thread to assist you, @Live4Him.

I can share some guidelines on how we can override the payments from your customers in QuickBooks Desktop (QBDT).

To start with, record the exact amount your client paid and apply this to the invoice. Here’s how:

1. Go to the Customers menu and select Receive Payments.
2. Select the Customer from the Received From field.
3. Enter the Payment Amount and Date.
4. Select the payment method.
5. Then, click Save & Close.

Once done, let’s resolve the remaining balance. The invoice will remain open since it was only partially paid. We can sort it out by writing this off as bad debt. To do so, you’ll need to Add an expense account to track the bad debt and Close out the unpaid invoices. Refer to this article for detailed steps: Write off bad debt in QuickBooks Desktop

Furthermore, you can check out the following articles about adding and matching transactions as well as reconciling your account in QuickBooks Desktop.

• Add and match Bank Feed transactions in QuickBooks Desktop
• Reconcile an account in QuickBooks Desktop

Let me know if you need further assistance with invoices. I’ll make sure to get back to you as soon as I can. Have a great day!

Thank you RoseJillB, I appreciate the quick response. I understand what you are saying, however, this will lead to incorrect income tracking (we will be taxed on the full amounts of the invoices). I enter the deductions from the settlement on the GJ as expenses. So that is taken care of, however, the amount deposited into our account is less than the invoices. Previously I entered payment for the invoices and had it deposited into an account that was used just to track the income (not an actual bank account). Then I separately entered the accurate amount in the business checking as a manual deposit. I can continue to do it this way, however, I was hoping for an easier method. :-)

Allow me to step in and help, Live4Him.

You can deposit the money your customer gave you for the expenses that they will shoulder. Just use the Accounts Receivable category so it can be used the reduce their invoice later on.

Next, record the shouldered expenses as billable to the customer. This way, you can add it to their invoice.

Next, record the invoice. Add the billable expense charge including what your company charges them.

Lastly, record the customer's payment to the invoice and apply the deposit as a payment, too.

That's it. Feel free to go back to this thread if you have any other concerns.

The second step is only performed if the commission amount (made to PERSONAL account) is actually transfered into the BUSINESS account, corret?

Good evening, @koku. 

Congrats on making your first post here in the Community. Thanks for joining in on this thread about entering income. 

The best route would be to consult with your accountant to be sure about your question. They'll be able to explain in detail what the steps do. 

Keep us updated on what your accountant says. We're always here to have your back. Have a wonderful night!