Commission paid on sale of artwork?

Jed_SutterJed_Sutter Member Posts: 6

New art business. ( just graduated from hobby status-Yay!). Entered a local art show, with rules stating the art center would take a 40% commission on any/all sales. I sold two pieces. I received a check for 60% of the sale price. Do I just call the 60% net the sale price (easier, yes)? However, I would like to enter the original sale price and then somehow account for the 40% commission I had to pay to play (Because ultimately it better reflects the value of my art to show the higher sale price)

So, how do I best categorize the sale and commission? Because the only thing I have to show for the sale of both paintings is a single depreciated check.
Thank you!


  • AlexiaAlexia Administrator Posts: 3,315 admin

    Congratulations, @Jed_Sutter! That's amazing!

    Are you new to Wave as well?

    Here's how you would handle doing this in Wave. First, you'll have to set a few things up...

    • On your Chart of Accounts, under Accounting, create an Asset account, under the Bank & Cash account type, called Undeposited Funds. This will be where you record the full payment for your art.
    • Also create an expense account called "Gallery commission"
    • On the Products & Services page, under Purchases, create an item called "Gallery commission" which uses "Gallery commission" as an expense account.

    Now you're ready to enter those sales! Here's what you do:

    1. Create an invoice for the full price of your piece. After you've approved the draft, click "Skip sending" (assuming your buyer doesn't need this invoice as they'll have one from the gallery), and then Record Payment.
    2. Enter the payment for the full amount and choose "Undeposited Funds" as your payments account.
    3. Go to Bills, under Purchases, and create a bill using that "Gallery commission" item we created earlier. You'll have to put calculate the amount of the commission yourself if you don't already have that information. Record this bill as paid out of "Undeposited Funds".
    4. Go your transactions page and create an expense to Undeposited Funds for what's left in the account, which should be your 60%. Categorize that transaction as "Transfer to Bank, Credit Card or Loan" and choose the appropriate bank account.

    The approach in this workflow is to create a sort of floating, middle-man account out of which the gallery gets paid before money hits your bank account.

    I can't speak to the tax implications of handling this one way or another, however, and I'm in no way an accountant or tax specialist. I strongly recommend checking in with an accountant to make sure that you are handling taxes correctly throughout this process.

    Hope this helps! :)

  • Jed_SutterJed_Sutter Member Posts: 6

    Hi, and thank you so much. I NEVER would have figured this out on my own!!!

  • AlexiaAlexia Administrator Posts: 3,315 admin

    Happy to help out, @Jed_Sutter!

  • Jed_SutterJed_Sutter Member Posts: 6

    Okay, that only took me a 1-2 hour to figure out. Lol. And it begets my next question ( which proves I really am hopeless): when I connect to my bank and Wave downloads the deposit of a single check, will that result in my account looking like it’s been paid twice? ( once by my accounting, and once by the bank?)
    Thank you for all your remedial help🤯

  • AlexiaAlexia Administrator Posts: 3,315 admin

    Don't be too hard on yourself, @Jed_Sutter! It's a bit of a convoluted workaround, but I'm sure it'll be much faster the next time around!

    Yes, that would create a duplicate. In your particular case, you're better off just deleting the copy uploaded by your bank. In most situations, you would select the payment recorded to your invoice and the one from your bank, and use the "Merge" feature to turn them into a single transaction. Because the cheque matches the transfer here, you won't be able to do this, since transfers cannot be merged in Wave. Thankfully, deleting the transaction uploaded from the bank works just as well.

  • Jed_SutterJed_Sutter Member Posts: 6

    Just to clarify, that took a half hour, not one to two hours, LOL and it’s not that it was convoluted, it’s that I don’t know anything about accounting. I appreciate all of your help!

  • AlexiaAlexia Administrator Posts: 3,315 admin

    Happy to hear things went faster than expected, @Jed_Sutter!

    Speaking from experience, the best way to learn about this stuff is to throw yourself in the deep end and read everything you can!

    If you haven't seen Fearless Accounting yet, I recommend you check it out. It's a great guide on how to best use Wave and it might be an awesome starting point for you!

  • Jed_SutterJed_Sutter Member Posts: 6
    I’d like to go back to my original question. The art commissions I set up as recommended by Alexia now show up as overdue bills. I’m not sure how to make them go away without deleting the items. Can you please help? Thank you.
  • SamdSamd Administrator Posts: 513 admin

    @Jed_Sutter Ah I think I can see what the issue may be here. You should be able to head over to Purchases > Bills, and mark the outstanding bills as paid, and choose Undeposited Funds as the account those payments are coming from. This will close out the bills, and acknowledge the floating funds leftover in Undeposited are being directed towards the Gallery Commission. It looks like that step was accidentally left out in the initial instructions. I hope this helps to clarify though!

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