To run a business, only product availability or having many unique services is not enough. Marketing and accounting are the most important things in business. So in many companies are handled marketing by some employees who take some extra salaries as a commission, and accounting is managed by the best accounting software, QuickBooks Online. Most of the company records the commission incomes of the employees in QuickBooks Online. But do you know how to record commission income in QuickBooks Online? If not, then in this blog, we will learn the way to record commission income in QuickBooks Online in detail.
What is Commission Income?
Every business needs marketing to improve its product sales or get clients to use its services. So to fulfil those needs, companies hire employees and agents, or brokers for marketing. They have done the process properly and introduced your product or services to the public. When a business sells its product and gets the payment, they are pays some percentage of the selling amount to these workers who are involved in marketing as a commission or a fee, which is known as Commission Income of the workers. That commission amount was not stable, that always depends on the product sales and the agreement.
Reason to Record Commission Income
Recording your every income and daily expenses is a best practice that helps you in many ways. We hope, you all are know about the commission income, that is, the percentage of your company’s sales. But do you know what the reason is or why it is important to record commission income? If not, then below we provide some reasons to learn and know about the importance and the reason for the record commission income.
- Create the perfect financial report.
- Plan financial expenses and budget.
- Manage and monitor the cash flow.
- Accurate tax calculation.
- Easily analyze performance.
How to Record Commission Income in QuickBooks Online?
As you all know, QuickBooks Online is specially designed to manage accounting in a web browser. By using QBO, you can access and manage your accounting properly for any where. It automates many things, where you can record your income and manage your expenses. But do you know how to record commission income in QuickBooks Online? If not, then below we provide the different processes to record commission income in QuickBooks Online.
1: Using a Service Item for Record Commissions Income
- Open QuickBooks Online, then go to settings.
- Now open the Product and Services tab.
- Then tap on New and choose the Service option.
- After that, enter the commission item name.
- Then enter the commission percentage or amount in the sales price or rate field, if applicable.
- Now choose a particular income account.
- Add a tick mark on the box to indicate you sell this product/service to your customers.
- Then, click Save and close.
2: Record Commission Income Through Bank Deposit
- Sign in to QBO and click on “+” New.
- Then select Bank deposit.
- Now choose the bank account to deposit the funds into.
- Now select the customer from the Received from column who paid the commission.
- After that, choose the account that you use to record commission income from the Account column.
- Now just enter the Commission amount and tap on save.
3: Record Commission Income Through Payroll
- Log in to QuickBooks Online.
- Then select Payroll from the left side navigation menu.
- Then go to the Employee option.
- Now choose the employee and open pay types.
- After that, click on the start button or the edit option.
- Now select the pay type, such as “Commission only” or “Commission”, according to your needs.
- Now click on Save, and done.
Benefits of Record Commission Income in QuickBooks Online
Recording Commission Income in QuickBooks Online legally helps you in many ways, and that provides many benefits, which we are discussing below in detail.
- Increase employees’ income: When your employees get their salary with the commission amount, then obviously their income is increased.
- Improve employees’ motivation: When Employees get extra income by commission, they try to work properly to get more commission amounts.
- Employees’ skill development: When employees are motivated, they try to improve or develop their skills to get more commission money.
- Manage Expenses: By recording commission income, employees can make their budget and manage their expenses properly.
- Display the business’s financial health: A perfect financial record helps to show the business’s performance and its customer trust.
- Ensures compliance: QuickBooks Online follows the necessary actions and procedures to record commission income. That ensures compliance.
- Boosts productivity and growth: When employees get the commission, they are shown their loyalty and work properly, which helps to increase productivity and the company’s revenue.
Conclusion
Recording commission income in QuickBooks Online is a good thing that helps employees and companies. A financial record always shows the company’s performance and its loyalty. Here we provide a detailed explanation on how to record commission income in QuickBooks Online in different ways, with its reasons and benefits in detail. After learning this article, we hope you all understand this article and get the proper answer to your question.