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6
6741
April 28, 2021
Question

Income seperation

  • April 28, 2021
  • 1 reply
  • 0 views
  1. for a company that is connecting sellers to buyers, and taking a commission for every sale, like etsy, how do you separate the incoming balance? what is the journal entry, etc, 

 

Sales Receipt:

$50 Product

$2.25 Tax

$10.00 Tip

 

Breakdown:

10% subtotal (minus tax/tip) goes to our company: $5

$2.25 collect/remit tax

$55 held for seller until they withdraw from their account

1 reply

J
JonahMc
August 4, 2021

Hi @6741 (if that is your real name ;)

 

The best setup for a two-sided marketplace is generally to do the following:

 

  1. Create a Bill on behalf of the seller and designate each line item as a re-billable expense with a 10% markup. Be sure to designate an income account for the markup; i.e. if the marketplace is Etsy, the markup fee would then be automatically booked as Etsy income.
  2. Create an invoice on behalf of the buyer and add the re-billable "expenses" from the bill you just created

 

If the purchase breakdown from your example is real, that's great as well because QuickBooks Online has a setting that allows booking both tips and tax on an invoice (see screenshots).

 

 

This setup is nice because it more-or-less automatically separates tips, tax, and the two-sided marketplace's fee automatically.

 

Let me know if any of this is unclear, or if you have other questions about it.

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