Tax/Accounting Question for Freight Dispatch Company
We recently established a business and filed as an LLC. Currently, we are operating as a sole proprietorship but plan change to an S-corporation this tax year.
Our business operates as a freight brokerage/dispatch service. We connect freight haulers (trucking companies and owner-operators) with customers who need transportation services. The customer pays our company the full amount for the freight service, and we then remit payment to the carrier while retaining a percentage as our dispatch/brokerage fee. I currently utilize Zoho books to generate invoices to send to the customers and use the expense module to record the payments to the haulers. However, on our profit and loss statement it is showing as Sales and Expenses when realistically it is just a pass thru us and were are keeping a small percentage for making the connection.
What is the best and easiest way to track these pass-through payments so that we are only taxed on our net revenue (the dispatch fee) rather than the total gross amount received from customers?