I am a tour operator. I receive money from clients most of which is forwarded on to different overseas tour operators leaving 10-20% which is my commission and is transferred to my P&L as income.
Obviously the money held for clients is a liability and held in trust. I need to receive money into a client file from the client and pay money out of the client file to overseas operators. These transactions belong in the balance sheet under liabilities but I need files for each client showing incoming receipts and outgoing payments. The final payment will be my commission which will go to income in the P&L.
I must not get client money mixed up with the company’s money as this is the quickest way to lose control and go broke.