We invoice Hotels for commission for bookings that we make, as an agent. Do I categorise these as Commission or General Purchases? If it should not go into Commission received, how can I change it on the Chart of Accounts? Does this make any difference to the Profit & Loss account at the end of the year.
It sounds like a type of sales income, so it wouldn’t go under general purchases. This type of income would normally go under Commissions Received (4902). If you are VAT registered you will need to assign this to an invoice and itemise the VAT (where applicable).
Hi Glenn Thank you although I didn’t mean General Purchases I meant General Sales. If it is included in General Sales does it make any difference? I have entries in both Commissions and General Sales for the commission payment which has been invoiced to the Hotel. We are nearing our end of financial year, and our accountant has access to the account, should I tidy it up and have all the commission payments under one code either 4902 or 4000 so there is no doubt?
Doesn’t really make any difference as it still shows in the same place on the P&L and balance sheet. You can create your own codes if you want more accurate reporting on various income streams. If you’re unsure you may want to run it by your accountant.
Thanks I will. The way I look at it is that its all income!
That’s correct, that tends to be the way HMRC will view it to.
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