Offest expenses against Sale

[David McCardle]

Does anyone know how to offset an expense item against a specific invoice?

For example: if you have a rental property and receive a statement with agents commissions as well as rent. For tax purposes you have to gross up income (report total rent collected), you then need to offset agents commission as an expense, but you don't actually pay for this from your bank account they just deduct it from the rent and you receive the difference. What's the easiest way to do this?

I've previously issued an invoice for the full amount of rent and a bill for total expenses and received and paid both on the same day but this incorrectly shows as me having received amounts greater than is shown in my bank statement and paying expenses that don't show up in my bank statements. So to an outsider although bank ac reconciles it isn't easy to follow.

[gibbo]

The best way to do this is to pass the receipts through a "Clearing" bank Account.
Set up a dummy bank account. Enter the Invoice for the full amount. Post it to the Clearing Account. Then make out a cheque from the Clearing Account for the fees. What is left is the money to be deposited to the real Bank Account. Simply transfer it over.
Done!

[cwater]

David,
I have a few clients of mine with rental properties that are administered by agents and the way I handle this situation is to treat the transaction as it is, a receipt.
I record the deposit to show the gross rent received (as you correctly pointed out), allocating the G/L - Income Rent Rec'd, I then on the next line show agents commission, (or any charges for repair works etc), as negative (-) amounts, allocating the G/L - expense A/c to Agents Commission. This has the effect of recording the agents deductions as debits on the P&L, which is exactly what you want. I always use the memo field to it's maximum, by showing rental details to and from dates, any repair details done etc.
The beauty of doing it this way is that you are recording the transaction as a deposit, which means your QB's Bank A/c (Cash Book) will balance to your Bank Statement, thus making your Bank reconciliation much easier. Creating mock Invoices or bills or a dummy bank A/c's is not the way to go . . . . !#%.

I always try to use QB's the way you would record transactions manually. The real benefit for me with QB's is the fact that it allows you to work in ledgers (Debits & Credits) All Balance sheet accounts have ledgers behind them, I always find it easier to work with ledgers. After all it's double entry bookkeeping, whilst you are making one entry there's another one that QB's creates.

I hope this helps

Geoff Woodford
Clearwater Bookkeeping

[gibbo]

Geoff
How do you treat the GST in a deposit? I assume that there would be Input tax Credits due on the Commission (if it was a commercial lease) as well as GST payable on the rent. There is no way to add a tax code to a deposit transaction. Moving things through the clearing account is the only way that I know of that allows not only the GST to be entered, but ensures it throws it to the correct side of the Tax account.