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N
nigel-prcavalry-
June 19, 2024
Question

How do I deduct a commission and show that as the sale?

  • June 19, 2024
  • 1 reply
  • 0 views
We are a matchmaking service between employers and freelancers. The money flows like this: 1) Freelancer invoices client (not on QB). 2) Client pays into our client account. 3) We take commission and add VAT 4) We transfer the balance to the freelancer from our client account. 5) We send the freelancer an invoice reipt for the commission. Can someone explain the steps I need to take please, because 90 minutes into a call with QB we hadn't got anywhere! It is doable (if a bit clunky) because we covered it in the onbarding, but my notes have been lost and I was promised an explainer email from QB which has never been sent. Thank you

1 reply

J
JuliaMikkaelaQ
June 19, 2024

I know a way to record it, Nigel. I'll ensure you can deduct the commission and show it as a sale in QuickBooks Online (QBO).

 

The first thing to do is to create an invoice to record it as a sale transaction. You can also add the VAT to it by ticking the VAT column. Then, make a received payment and deposit it to the Undeposited funds account.

 

Next, transfer the money from the Undeposited funds to your bank account and include the Accounts Payable or Creditors account for the commission as a negative amount. I'll write down the steps below:

 

  1. Click the +New button, and select Bank Deposit.
  2. Tick the payment in the Select the payments included in this deposit section.
  3. In the Add funds to this deposit part, choose the freelancer (add them as a supplier) and the Accounts Payable in the Account column, then enter the equivalent (-) negative amount.
  4. Press Save and close.

 

To track the commission, you create a tracking or expense account. I also recommend seeking guidance from your accountant to help you choose the correct type that suits your business.

 

Afterward, make a Journal Entry (JE) to credit the Accounts Payable and debit it to the commission account.

 

Lastly, since the option to create an invoice receipt for your freelancer is unavailable as it is a supplier, you could record an expense transaction to link the deposit and the JE, which will zero out its balance in the supplier profile.

 

Here's how:

 

  1. Click the +New button, and select Expense.
  2. Choose the freelancer in the Payee dropdown.
  3. In the Add to Expense left menu, hit Add for the deposit and JE transactions.
  4. Press Save and close.


 

Furthermore, You can read through these articles as additional references in managing your transactions and VAT in QuickBooks:

 

 

That's it. You'll be able to record and deduct the commission and show it as a sale in the program. If you have questions or need further guidance, the comment section is always available. We'll be here 24/7 and help you with anything you need.

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