How to handle commissions

ERVERV Member Posts: 4

I am a travel agency owner, all the money I receive is from vendors paying a commission that one of the travel planners earned. I want my daily bank account to reflect the money that is actually available - even if I haven't paid my travel planner. Right now I record the commission from my vendor as follows: ACCOUNT: Business Checking, DEPOSIT, CATEGORY Sales/Vendor commission, CUSTOMER name of vendor. I record money owed to my travel planner based on that commission by: ACCOUNT: Due to Agent, WITHDRAWAL, CATEGORY: refund for sales/commissions.

I followed what someone on one of the boards told me to do, but it's not balancing and I'm not sure why. The ACCOUNT: Due To Agent is listed in my liabilities & credit cards under expected payments to vendors and I do keep track of my agents as vendors. How can I get my balance to be the actual money I have MINUS commissions I will be paying out at some point?

Comments

  • HeatherAnnMHeatherAnnM Member Posts: 2

    Hi ERV, Did you figure this problem out? I have a similar issue and I'm trying to do it the most accurate way. If you have any updates can you let me know how you handled it? Thanks so much

  • JulianPJulianP Administrator Posts: 1,002 admin

    Hey there @ERV and @HeatherAnnM !

    When you are paid, you can add an expense transaction in the liability account "owed to vendors". The amount should be what is owed to that vendor. Categorize it as "Refund for income" and select the income account that the money was deposited into.

    When you actually take this money and pay the vendor, you can create a transfer from your bank account to the liability account (owed to vendors) to pay off the owed amount.

    You can even go as far as creating a different liability account per vendor to track each one accordingly, however, this is totally optional and up to you. :smile:

  • magicwillmagicwill Member Posts: 37 ✭✭

    @HeatherAnnM,
    If I'm correctly understanding the mechanism here, your agency's actual income consists of a portion of the commission earned by the travel planner. Identifying the proper method for recording this activity hinges on understanding the nature of the relationship among the parties involved. If you'd like to reach out via e-mail, I'd be happy to have that conversation. My business e-mail is [email protected]

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