Hi all, I am not a book-keeper but have just started my own business doing property inventories on residential lettings.
Most of the agents that I will be doing work for will take a percentage (which is not passed on and kept for themselves) of my fees. For example say if I do a job for them which costs £80 they take 10% - so they would only end up paying me £72. Which I understand is the 'norm' especially with estate agents. I think they call these 'kick-backs' ??
My questions is how would I account for these - is it as simple as invoicing them the full amount - then supply them with a credit note.
Any help or advice appriciated - I may have further questions !!
Congratulations on your new business. In terms of invoicing, the easiest thing to do is show the entries on 1 invoice. As per your example, show 1 line of the invoice at £80 which is coded to revenue, then have a second line which shows 'Less 10% Agent Fees' so it will be a minus (£8), and this should be coded to agent fees, a code you can set up within your cost of sales, as the agent fee will be a cost of sale to your business. The net value of the invoice will be £72. This way you do not have to faff about raising a seperate credit note. The coding is very important so you must make sure you code the split to the correct place so your revenue and cost of sales figues are correct. Hope this helps
I would do the same as Flexifinancials, and invoice the full amount showing a percentage deduction.
In effect it is no different to a trader invoicing another trader, and showing a trade discount on the invoice. Perfectly legal.
There is no reason the end user/ landlord has to know who performed the work. Unless there is an agreement between agent and landlord to the conterary, the agent can can sublet work in any way they like to fulfil their obligation.
Edit: Forgot to add, this method is also simpler and less confusing to both parties
Bill
-- Edited by Wella on Tuesday 26th of July 2011 03:27:45 PM
