Retaining commission for items sold

AshMay

I am an estate sale agent. I have estate sales for people inside their homes, selling furniture, etc owned by the client. For this service, I retain a commission on total sales. For example: I conduct a two-day estate sale, sell $10,000 and retain 35% commission - writing the client a check for $6,500. How do I categorize total sales (all money, including sales tax collected is deposited into my account). How do I categorize commission payments to each of my clients? Thank you!

Mikeg

AshMay,
I would create an account under Operating expenses. You could name it client commissions, client cost. Whatever you think is best. Payments to clients should be posted there.
Sales tax can be handled in one of two ways. The easiest is to record revenue at gross (incl sales tax) and when you remit sales tax to the state, then expense the amount paid. The second way is to post as a payable the sales tax collected. An example of posting sales would be debit cash (cash received) - credit sales tax payable (amount collected) - credit sales. When you remit the sales tax your would debit sales tax payable and credit cash. Sales tax collections has a net zero effect on the books of the business.
Hope that helps
Mike G, CPA
www.mgfinancial.net

AshMay

That solves it for me. Thank you so much!