Help with Bill/Invoice for Travel Agency Owner
ERV
Member Posts: 4
I'm trying to understand the best way to record transactions. My company gets paid commission for vacations sold (Carnival, RC, Viking, etc) from that a % goes to my Independent Contractor that booked the vacation. I don't want to create more work for myself than I have to but I need to understand how much $ I have going out - even in the future so I can understand the "actual" money my business has at any given time. Sometimes our company is paid a commission for a vacation that won't happen for months - our IC is not paid for that vacation until after the client travels (in case they cancel, etc). So I have this income - but it's not really all income because a % is due in a few months to the contractor. What is the best way to keep track of monies received from companies and how much I owe and pay contractors.
Comments
Hi @ERV . Let's try and take a stab at this. To be clear though, this does involve slightly more complex steps, and I'm not an accountant, so I do still advise that you request professional help on how to properly account for this.
First, in the chart of accounts, set up a liability called "Due to contractor" or similar.
When a customer pays, you will add an expense transaction in this liability account for the amount owed to your contractor (their share of the vacation income). It will be categorised as "Refund for Income," and you select the income account that the original payment was recorded to. The amount would be the portion of the sale that belongs to your contractor. This effectively records money owed in your liability account.
When you actually make the payment to your contractor, you can just categorize the payment as a transfer to this liability account, thus paying off the amount owed to your contractor.
Thank you. I am NOT a financial person at all. I'm going to write these steps and refer to them often. I appreciate your time!!