You are probably already familiar with recording income through a deposit or recording an expense. There may be times that one transaction contains both. Do you record each separately? NO. You want to record a single transaction, so that the transaction amount matches the amount hitting your bank account. This makes for better tracking and easier reconciling.
An example of when this type of transaction occurs is when you pay a vendor a monthly subscription, but you also receive a sales commission. The vendor processes one statement each month that has both pieces combined.
Expense is More Than the Income
Let’s say you’ve just started a new vendor relationship where each month you pay $100 subscription fee to utilize their online shopping platform. You are also paid a monthly commission on the sales processed through their platform. Your first month’s commission is $60. In this scenario, you will record the transaction as a net expense.
Figure 1: Enter the expense for the $100 subscription fee as normal. Before hitting Save, you will add a second line under Account Details, but since it is income, it will be a negative amount. The net between the expense and income will be the amount of the transaction ($40 in this case).
Income is More Than the Expense
We still have the monthly $100 subscription fee, but the next month commissions earned is $120. In this scenario, you will record the transaction as a net deposit.
Figure 2: Enter the deposit for the $120 commission as normal. Before hitting Save, you will add a second line under Add New Deposits, but since it is an expense, it will be a negative amount. The net between the income and expense will be the amount of the transaction ($20 in this case).
**Note: you cannot duplicate a name as both a vendor and a customer. If you expect income to regularly exceed the expense, I would recommend setting it up as a customer. If you expect to the expense to regularly exceed the income, I would recommend setting it up as a vendor.
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