Sales come into the bank account net of commission fees. Sales are subject to 20% VAT, the commission is an EC reverse charge service. I am recording the transaction as a Deposit and then using the split function to divide the VATable income between income codes. I then add another line and express the commission as a negative value using code ECS 20%, to reach the correct net amount received into bank. It seems to me that QB online is recording the 20% VAT on the reverse charge wrongly. Eg the commission is £16.68 and the VAT is showing as £3.34 when I believe it should be £2.78? Am I doing this wrong and is there a better way of dealing with these sales receipts?
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We normally suggest to record the gross sale but split it between commission and what you received to the bank by following the below steps:
1. Click on the plus icon in the top right hand corner.
2. Select Sales Receipt.
3. Enter the original sales details with the gross amount (e.g. customer, date and VAT code)
4. For Deposit to, change this to Undeposited Funds.
5. Save and close.
6. Click on the plus icon and select Bank Deposit.
7. Select the bank you received the money to and the date received at the top of the screen.
8. Select the sales receipt by ticking the box under the section Select the payments included in this deposit.
9. Under the section Add other funds to this deposit enter the commission details:
- Select the customer it was Received from.
- Under Account select an account to deposit your commission too (e.g. commission fees).
- Enter the amount of commission as a negative figure under Amount (e.g. -16.68).
- Select VAT code if applicable.
10. Save and close.
This will record the net amount to your bank account and the rest as commission. In regards to the amount of VAT that is being recorded, it sounds like from the figures you have given, you are comparing inclusive to exclusive. However with the particular VAT code you are using this will not affect the figures and 3.34 would be correct. However if you are unsure if you are using the correct VAT code I would suggest speaking to your accountant for them to check this for you.
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