QuickBooks and Xero for travel agencies: how to map trust money, commission and payroll

To set up QuickBooks or Xero for a travel agency, keep traveler money and agency money in separate accounts. Record client deposits as a liability until the trip is paid out. When you act as an agent, book only your commission and service fees as income. Track advisor payouts as payroll or 1099 contractor payments.

Get the chart of accounts right once and every month closes faster. This guide covers the gross vs net question, trust money, a suggested chart of accounts, setup steps in QuickBooks Online and Xero, and the mistakes to avoid. This is general information, not accounting or tax advice.

Why is travel agency bookkeeping different?

Most of the money that passes through a travel agency isn't the agency's. A traveler pays $6,000 for a cruise. Most of it belongs to the cruise line. Your share is the commission, plus any planning fee you charge.

Generic small-business setups treat every deposit as sales. For an agency, that inflates revenue, hides what you owe suppliers, and can blur money that some states say must sit in a trust account. Two questions fix most of it:

1. Is the whole trip your revenue, or only your commission?
2. Whose money is in your bank account right now?

Is the whole trip your revenue, or just the commission?

Under US accounting rules (ASC 606), it depends on whether you act as a principal or an agent. PwC's revenue guide calls the test a two-step process. First identify the good or service the traveler buys. Then ask whether you control it before it reaches them.

A principal reports the price paid by the end consumer as revenue, with the supplier's cost as an expense. An agent reports only the net amount retained after paying the other party.

The standard's indicators of control, as PwC summarizes them from ASC 606-10-55-39:

It is not an accounting policy election. You can't pick gross because it makes the top line look bigger. PwC's own travel example shows the other side. A travel company commits to buy airline tickets in advance, must pay for them even if they don't resell, and sets their prices. PwC concludes it is the principal for the ticket sale.

What this means for agencies (practical guidance, not a conclusion): it depends on your facts. An advisor who books a supplier's trip at the supplier's price, takes no inventory risk and earns a commission has few of the principal indicators, which points toward agent. An agency that prebuys space or sets its own package prices looks more like PwC's travel company, which was the principal. On a $6,000 cruise with a $600 commission, agent treatment means $600 of revenue and principal treatment means $6,000. Ask your CPA which applies to each type of sale you make.

Why are client deposits a liability, not income?

Because the money isn't yours yet. Intuit's own guidance for deposits says to record them in a liability account, since the money doesn't belong to you until it's used to pay for services. When the work is billed and paid, you turn that liability into income.

For travel, a few states go further and say where that money has to sit. This is a summary, not legal advice.

If you hold a trust account, give it its own bank account in QuickBooks or Xero, so the balance you see matches the bank and the liability. For registration, bonds and other states, see how travel agencies collect payments.

What chart of accounts should a travel agency use?

A chart of accounts is a complete list of your company's accounts and their balances. The account type you choose decides which reports, such as the Balance Sheet or Profit and Loss, show the data.

Here is a starting set for an agency that acts as an agent. It is practical guidance, not a standard. Adjust it with your accountant.

For when supplier commission is actually paid, see supplier commission explained. For how the advisor share is set, see commission split models.

How a booking moves through the books

Here is one $6,000 trip with a 10% commission and a 70% advisor split, paid to the supplier in full. The numbers are for illustration and assume you act as an agent.

If you pay the supplier net and keep your commission up front, the commission comes out of client deposits held instead of arriving later. Either way, as an agent your revenue is $600, not $6,000.

How to set it up in QuickBooks Online

1. Create the liability account for deposits. Intuit's steps: choose Other Current Liabilities as the account type and Trust Accounts - Liabilities as the detail type.
2. Add the income and expense accounts from the table above. QuickBooks already includes Accounts Payable (A/P) and Accounts Receivable (A/R) as default accounts.
3. Connect each bank account and set bank rules. Rules enter categories and descriptions into downloaded transactions for you, and can split a transaction by percentage or amount. You can create up to 2,000 rules, each with up to 5 conditions. Be careful with auto-post: if it's on, you won't get a chance to review transactions before QuickBooks adds them.
4. Turn on classes for advisors. Class tracking is available in QuickBooks Online Plus and Advanced, under Settings, Account and settings, Advanced, Categories. Use one class per advisor or per office to see profit by person.
5. Track contractors for 1099. Add each advisor paid as a contractor to the Tracked for 1099 list, and map your advisor commission expense account to the right 1099-NEC box.

How to set it up in Xero

1. Create the same accounts. Xero's Accounting API specification lists account types including current liability, revenue, direct costs and expense (API codes CURRLIAB, REVENUE, DIRECTCOSTS and EXPENSE). Those are developer codes, so the labels you see in Xero may be worded differently.
2. Connect bank feeds. Xero lets you connect business bank accounts so data is pulled through automatically, or import transactions manually if your bank doesn't connect.
3. Set bank rules. Use them to treat groups of similar transactions the same way every time, for example every payout from a cruise line to commission receivable.
4. Use tracking categories for advisors and trips. Each transaction line can carry a maximum of 2 tracking categories. A common split is one for the advisor and one for trip type or destination.
5. Set up the 1099 report. Set reporting rules so payments are categorized correctly. Xero can send contractors a secure link to complete a digital W-9, and it excludes credit card transactions from the report.

QuickBooks vs Xero for travel agencies

Both do the job. Pick the one your accountant already works in.

How should you pay advisors: payroll or 1099?

It depends on how much control you have over their work, not what you call them. The IRS tests are in paying travel agents: W-2 vs 1099.

Employees go through payroll, with withholding and a W-2. Contractors are vendors in your books. You collect a W-9 and report what you paid on a Form 1099-NEC. For tax years beginning after 2025 (payments made after December 31, 2025), the threshold is $2,000 or more, and may be adjusted for inflation beginning in 2027. The form is due on or before January 31, or the next business day if that date falls on a weekend or legal holiday.

Card payments are different. Payments made by credit or payment card must be reported on Form 1099-K by the payment settlement entity, not on a 1099-NEC. QuickBooks already excludes card, PayPal and Venmo payments from its 1099s for that reason. Pay advisors by bank transfer and they stay on your 1099-NEC.

Common mistakes

1. Booking the whole trip as sales. If you're an agent, gross bookings belong in a report, not in revenue.
2. Mixing trust and operating money. One bank account for everything makes the trust balance impossible to prove.
3. Recording commission only when the check arrives. You lose track of what suppliers still owe you. Use commission receivable.
4. Leaving auto-post on for every rule. One wrong rule then codes hundreds of transactions without review.
5. Coding advisor payouts to a generic expense. Map them to one account that feeds your 1099 report.
6. Skipping the W-9 at onboarding. Chasing tax IDs in January is harder.

How Tripdash helps with commission reconciliation

Tripdash shows expected money versus the balance actually received per booking, along with supplier invoices and receipts, and QuickBooks or Xero sync. Month-end closes faster because every gap between expected and received money is visible. See how Tripdash works.

Sources

1. PwC Viewpoint. Revenue from contracts with customers, 10.2 Principal versus agent framework, March 15, 2025.
2. Intuit QuickBooks. Record a retainer or deposit, updated August 4, 2026.
3. Intuit QuickBooks. Learn about the chart of accounts in QuickBooks Online, updated August 5, 2026.
4. Intuit QuickBooks. Set up bank rules to categorize online banking transactions, updated September 11, 2026.
5. Intuit QuickBooks. Turn on class tracking, updated August 3, 2026.
6. Intuit QuickBooks. Create and file 1099s with QuickBooks Online, updated October 20, 2026.
7. Xero. Reconcile bank transactions, accessed October 2026.
8. Xero. 1099 software for your small business, accessed October 2026.
9. Xero. Xero Accounting API OpenAPI specification, version 19.1.0.
10. Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC, revision of December 2026.
11. State sources: California Attorney General, Seller of Travel laws, Bus. & Prof. Code §§ 17550–17550.59 (§ 17550.15), RCW 19.138.140, HRS § 468L-5, Hawaii DCCA.