quickbooks online, sole trader credit notes

[supergas]

Hi
I am a sole trader and sub contract to a company, They take 20 percent of my invoice total so i add this on to my invoice before submitting it to them. they ask that I send an invoice and a credit note at the same time then they pay my invoice minus the 20 percent. what is the best way to handle this in quickbooks online? I have tried altering the invoice once they have paid by adding a line saying credit note and minus x amount but quickbooks reads this as a partial payment. im confused as to how to doeal with this so any suggestions would be greatly appreciated.

 

[Daybooks]

The choice of software should make no difference.

I would:

1. invoice the full 100 to the appropriate sales code and issue it to them
2. on receipt of the 80 allocate it to the invoice and at the same time raise and allocate a credit note against the invoice to fully settle the invoice. Do not send the credit note to the customer. Post the credit note to a suitable balance sheet code (e.g. Tax withheld).

You will then have the correct amount recorded for sales, the correct customer balance and a debit balance on the balance sheet code representing the tax withheld.

The customer also has the correct invoice settled by a payment to you and a payment to the tax authority (HMRC).

 

[Ziggy2024]

Hi
I am a sole trader and sub contract to a company, They take 20 percent of my invoice total so i add this on to my invoice before submitting it to them. they ask that I send an invoice and a credit note at the same time then they pay my invoice minus the 20 percent. what is the best way to handle this in quickbooks online? I have tried altering the invoice once they have paid by adding a line saying credit note and minus x amount but quickbooks reads this as a partial payment. im confused as to how to doeal with this so any suggestions would be greatly appreciated.

You shouldn't need to send a credit note. Are you talking about CIS because you seem to be suggesting that you are adding on 20% to cover the deduction?

You can use the discount facility in QuickBooks. In Xero you can show a negative line on the sales invoice. Both softwares have CIS modules tag may be worth looking into which automatically shows the CIS deduction on the invoice.

 

[numbersrule]

Hi
I am a sole trader and sub contract to a company, They take 20 percent of my invoice total so i add this on to my invoice before submitting it to them. they ask that I send an invoice and a credit note at the same time then they pay my invoice minus the 20 percent. what is the best way to handle this in quickbooks online? I have tried altering the invoice once they have paid by adding a line saying credit note and minus x amount but quickbooks reads this as a partial payment. im confused as to how to doeal with this so any suggestions would be greatly appreciated.

Why is the 20% being deducted?

As Ziggy says, if this is CIS then Quickbooks should allow you to set your business up as a CIS subcontractor so that the tax deduction is recorded correctly In QuickBooks.

CIS guide in QuickBooks

This guide gives a brief introduction to the Construction Industry Scheme (CIS) and how to use the CIS feature in QuickBooks Online.If you're already using CIS

quickbooks.intuit.com

In my opinion 'adding 20% on' to 'allow' for the deduction is not in accordance with how CIS works.

 

[supergas]

You shouldn't need to send a credit note. Are you talking about CIS because you seem to be suggesting that you are adding on 20% to cover the deduction?

You can use the discount facility in QuickBooks. In Xero you can show a negative line on the sales invoice. Both softwares have CIS modules tag may be worth looking into which automatically shows the CIS deduction on the invoice.

Hi thankyou for your response, the company in question takes cis and the 20 percent fee is additional, its what they demand we add on top of the invoice that they then pass on to their client who pays the full amount then they deduct 20 percent and cis before giving me the remainder. Im struggling with how i process this for my books.

 

[Tables Force]

Hi thankyou for your response, the company in question takes cis and the 20 percent fee is additional, its what they demand we add on top of the invoice that they then pass on to their client who pays the full amount then they deduct 20 percent and cis before giving me the remainder. Im struggling with how i process this for my books.

You shouldn't be processing their markup/profit through your books.

 

[Bobbo]

Hi thankyou for your response, the company in question takes cis and the 20 percent fee is additional, its what they demand we add on top of the invoice that they then pass on to their client who pays the full amount then they deduct 20 percent and cis before giving me the remainder. Im struggling with how i process this for my books.

This slightly sounds like this company are essentially having you create false invoices so they can defraud their customer (by making it look like the services they buy in cost 20% more than they actually do). E.g. you invoice this company 120 but then give them a credit note for 20 so you get 100. They show their customer the invoice from you for 120 and charge their customer accordingly pocketing the 20 difference.

Hopefully that's not the case and there's a legitimate reason for it. E.g. if the 20 is a genuine commission charged to you by them, then rather than you issuing a credit note for 20 they should be issuing a sales invoice to you for the 20, setting that against the invoice for 120 from you and paying you 100.

 

[Paul Kelly ICHYB]

I am no expert on CIS, but surely you are increasing your sales and this will affect the tax you end up paying?

 

[Ziggy2024]

Hi thankyou for your response, the company in question takes cis and the 20 percent fee is additional, its what they demand we add on top of the invoice that they then pass on to their client who pays the full amount then they deduct 20 percent and cis before giving me the remainder. Im struggling with how i process this for my books.

You're struggling because as noted by other posters, this is not correct.

If the customer is insisting on this, then I would be sure to show it separately on the invoice with a deduction underneath to show the amount that is due to your company. That way there is no doubt how much the invoice amount comes to and how much CIS should be deducted.