Best Practice for Invoices/Payouts for a marketplace

jord8on

I run a business that allows Pros and other instructors/coaches to use my platform to run clinics, lessons, camps, and other things like this where their students use my site to register. It's kind of like a marketplace where students can look at the various coaches and choose the one they like the best, and at the end of the day, all the registration/booking money comes to my account.

e.g. a clinic costs $60 and I get 12 people to sign up, so I receive a total of $720. Stripe charges me 2.9% + $0.30/transaction. I tell the pros that use my site that they will get 90% of their Gross revenue, which in this case is $648. I then use the 10% or $72 to pay CC fees and whatever is left is revenue for my business.

This is my first business so I'm not sure the best way to handle these arrangements in terms of accounting. Additionally, I'd like to know (specifcally) the best way to manage and document all of this, in Wave.

Any ideas, fellow wavers?!

Barsin

Hey @jord8on

So a few things you may need to do here is set up your chart of accounts if you haven't already. You can create expense accounts for your payouts to your clients if you like or just have one blanket expense account called "Payout to clients".

So the issue a lot of business owners run into is that they want to take an income transaction, and split it to both an expense and an income. This rarely be done in the real world, so therefore Wave does not allow you to do it in the accounting software. Instead when you transfer the money into your clients account, you can take that expense transaction ($648) and set it to the proper expense account, "payout to clients".

Your account will likely show a $720 income in your sales income account. When you head to your profit and loss, you should be seeing a balance for what you've earned, versus what you've paid out. That difference should appear here. Sales minus expenses = revenue for your business.

If you haven't already read our article on how to account for transactions fees using the split deposit feature I'd recommend taking a look at this!

Now just to let you know we in Wave support are not accountants, just tech support agents, so I would definitely recommend reaching out to the pros here, but I see you've already posted in that thread. I imagine it's a bit quiet over the holidays, but feel free to post this in another channel like our accounting technical support channel

Jewel_w2w

BarsinA, Nicely phrase process, sales - expense = net