Delivery Service Commissions

Author
LNespoli
Junior Burger
  • Total Posts : 4
  • Joined: 2017/06/22 14:11:48
  • Status: offline
2017/10/18 16:39:35 (permalink)

Delivery Service Commissions

We have just hooked up with a food delivery service that takes 20% off the top and sends us payment once a month for the orders.  I'm curious how everyone is handling reconciling the accounts.  We were ringing in our checks for the service every time they placed an order and then discounting the check 20% to a "Food Delivery Comp Account".  The problem is my POS software backs out the comps from my food sales when it calculates tax.  The food delivery service on the other hand charges the customer tax on the full amount of the check BEFORE the comp.  When I go to file my sales tax it's a nightmare because my POS never matches the amount I need to submit.
 
My question is this:  
1.  Are you all "comping" out the 20% fee that these companies charge right on your POS when you ring in the tickets or are you ringing in the tickets full price and then once a month when you receive payments are you "expensing" the 20% fee under something on your P & L's?
 
I guess I'm looking for advice as to where everyone is expensing these 20% fees that the food delivery services are charging.
 
Thanks!
#1

5 Replies Related Threads

    edwmax
    Double Chili Cheeseburger
    • Total Posts : 2382
    • Joined: 2007/01/01 15:42:00
    • Location: Cairo, GA
    • Status: offline
    Re: Delivery Service Commissions 2017/10/19 09:40:48 (permalink)
    So 20% off-the-top includes 20% of the taxes.    ... I think you need to clarify how taxes are to be handled between the Delivery Service and you, then the POS system can be correctly set to account for taxes and commissions.   ... My thinking is the commissions paid should be before taxes at the sub-total and a line--item be included on the ticket to show the Service fee.    ...  Or, better the Delivery Service should just ADD their fee to your ticket.
     
     
     
    #2
    LNespoli
    Junior Burger
    • Total Posts : 4
    • Joined: 2017/06/22 14:11:48
    • Status: offline
    Re: Delivery Service Commissions 2017/10/19 09:56:37 (permalink)
    Okay thank you. :)
    #3
    tmiles
    Filet Mignon
    • Total Posts : 2577
    • Joined: 2004/10/01 15:59:00
    • Location: Millbury, MA
    • Status: offline
    Re: Delivery Service Commissions 2017/10/19 10:36:37 (permalink)
    First, I have never owned a restaurant.
    Taxes can be an issue. Hotel re-sellers have wanted to pay hotel taxes on what they paid for the room. Taxing authorities want the taxes on what the consumer pays. I have not followed the subject , as I have no dog in the fight, (because I am no longer in the travel business) but I remember reading about little hotels being put out of biz with past due tax bills and penalties. The big guys can fight the issue, but little guys are like the fly hitting a 60 mph windshield. I am sure that there are folks working for restaurant associations that know the answers, so it may be worth paying some dues.
    #4
    edwmax
    Double Chili Cheeseburger
    • Total Posts : 2382
    • Joined: 2007/01/01 15:42:00
    • Location: Cairo, GA
    • Status: offline
    Re: Delivery Service Commissions 2017/10/19 10:52:47 (permalink)
    To add a line item for the service fee, you need to use a 'margin multiplier'.    For 20% that would be 25% margin or 1.25 Xs.       Sub total the ticket (with or without taxes), then add 25%.
     
    (Price - Cost) / Cost = Margin   ;  Price = Ticket total; Cost = (your total - service fee)
     
    Assume Price -$10; Cost= ($10-20%)=$8   Then:    ($10 - $8) / $8 =.25    Markup the sub total (your price without service fee) by 1.25.     
     
    ... Now if your sub total without service fee is $10; then the Total Price is $10 x 1.25 = $12.50 and the service fee is $12.50 x 20% = $2.50.     ... The Service Fee is 20% of the Price and equal to 25% of the sub total. 
    post edited by edwmax - 2017/10/19 11:27:21
    #5
    edwmax
    Double Chili Cheeseburger
    • Total Posts : 2382
    • Joined: 2007/01/01 15:42:00
    • Location: Cairo, GA
    • Status: offline
    Re: Delivery Service Commissions 2017/10/19 11:28:48 (permalink)
    Now, taxes are still an issue so questions are:
    1)   Are these service fees (labor ) taxed?
    2)   If taxed, then the Service Company needs to account for their own taxes.   Have the Service Company furnish their taxes number so the related 20% of taxes can be properly reported and deducted on your tax bill.
    3)   If the Service fee is not taxed, then you should be able to account for ALL the taxes and the Service fee should not include 20% of the taxes.
     
     
    #6
    Jump to:
    © 2017 APG vNext Commercial Version 5.5