Handling sales on behalf of another company - transferring money

Accounting
1

Hello, we handle ticket sales on behalf of another organisation. Basically we sell the tickets for their event for them, using our ticketing software.

So, we receive the money via paypal, we then just transfer the money to them.

How can I reconcile this? Tagging it as a ‘sale’ to a client doesn’t seem right?

We don’t charge anything by the way, we don’t take a cut - we just help them out.

Eg -

£2000 comes in to our account via paypal >> I tag this as general sales
I then send £2000 to the other organisation >> how do I tag this money out?

Thanks.

2

You could set them up as a client, tag the money is as a payment on their account - with no invoice so it would just be a credit on the account and then refund the money back?

I don’t know how this would affect your accounts though as I’m not an accountant - It may be best to seek advice from yours. You might be better to raise a sales invoice and then a credit against it?

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3

Thanks for this, how would I tag the money is as a payment on their account?

Thanks!

4

From the bank screen you would click the Tag Me Button, to bring up:
image

chose the payment from a customer

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You can then chose to pay down multiple invoices or assign to a client account

Chose the client account and the credit balance will be added to their account as a pre-payment.

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5

Ah, great. Thanks very much

6

You really need to speak to your accountant before you decide on any method of entry.

Because you could be classed as an intermediary which means the money you receive and pass on isn’t yours and therefore creating a sales invoice would be incorrect.

Personally I don’t think recording it as sales is correct at all. So please seek advice.

Sale invoices will raise turnover thus creating a tax liability. All sorts of issues will follow from this course of action. Vat registration, tax liability etc.

Do you recieve commission before you transfer funds? If yes then this is what forms your turnover and will dictate how you record sales.

Example. Solicitor receives funds from client. It goes in a client account. It isn’t their income nor turnover. The commission is taken from the funds then the rest is transfered away. The commission part is what is recorded as a sale.

7

Thanks Paul, your right in that we are just an intermediary as we don’t take a cut.

I’m currently looking at setting up an internal account to log it as a loan out, and then back in again.

8

Hi Beth, I spoke to my accountant and he suggested the following:

"I’d be inclined to just set up 1 Loan account as a Debtor / Current Asset

  • For ticket sales, post them all in here as they arrive, then the single payment out to the other organisation clears it down to Nil

  • Similarly, the payment(s) to the organisation to lend them money goes to here, then it clears down again when they reimburse you and you post the Receipt(s) to here"

Can anyone suggest how to create this “account as a Debtor / Current Asset”?

I can see I can create a number of other bank accounts (credit card, loan etc) but I’m not sure which would be the correct one for this and I can’t seem to find a breakdown of each type in the knowledge base… any further help appreciated.

Thanks.

9

Behind the scenes they are largely the same. Using a loan or current account type should be suitable. Just depends on where you want it to appear in the list of accounts.

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