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SteveH93
September 12, 2019
Question

Charge a taxable service fee to a Vendor?

  • September 12, 2019
  • 1 reply
  • 0 views

(QuickBooks Desktop Pro 2019)

 

I buy a product from a vendor and create a PO and then generate a bill in QuickBooks. The product is cleaned, for which I want to charge them a service fee. The service fee is taxable.

 

Currently I add the cleaning as a separate item with a negative price, so that it calculates out as a negative value and subtracts from the value of the products purchased. However, this then calculates GST as a negative as well, and this causes its own set of complications. Alternatively, I try adding the cleaning charge in the "Expenses" tab, but the price has to be set as a negative here as well and the problem remains the same.

 

Any tips or advise is appreciated.

1 reply

L
LauraAB
September 12, 2019

Hello SteveH93,

 

I see how this is a tricky situation to manage. Depending on how you want to handle it, there are a couple of ways to approach this situation. I'll outline them below.

 

One option is to look at this as a vendor discount. This is a fairly simply process that's taken care of at the Pay Bills stage of handling your bills. Here are the steps.

 

  1. Select Pay Bills.
  2. Select the bill you want to pay.
  3. Click the Set Discount button.
  4. Enter the amount of the discount.
  5. Choose the Discount Account where you track income from discounts.
  6. Click Done.
  7. Complete the rest of the necessary bill information.
  8. Click Pay Selected Bills.

To learn more about this process, use the F1 key as a shortcut to bring up the Have a Question? window. From there, click the Help tab, then the Search button to bring up the search bar. Search "vendor discount" and click on the related articles.

 

The challenge with this option is it doesn't give you the ability to collect sales tax from the service offered. In which case, you may want to consider the next option.

 

The second options is treating this as a "my vendor is also my customer" sort of situation. Essentially, your vendor is providing you a product, but you're providing a service related to that product that you want to use to reduce the fee from the vendor. In QuickBooks Desktop, vendor and customer transactions need to be handled separately. We've had a few customers ask about this sort of situation, which takes a bit of accounting know-how to maneuver. Check out the following post and its responses from accountant users in our community: I have a customer who is also a vendor. I have paid his bill minus what he owes us. How do I credit his receivable with the shortfall from my payment?

 

Those should get you started. Feel free to touch base with your own accountant to see if there's anything else you can work out for this situation.

 

I hope that helps! Enjoy the rest of your day.

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