We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is Fees Earned?

By Theresa Miles
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Fees earned is an accounting category that appears in the revenue section of an income statement. It reflects revenue earned through the delivery of services during the time period indicated at the top of the statement. Typically, the type of business that will carry this kind of revenue account on the books is a consultancy, a professional firm or a business hired as an independent contractor.

A business can receive income from many different sources. It can sell products, deliver services or generate passive income from investments. Each source of income is recorded in its own revenue account in the company's accounting system, so the appropriate tax rules can be applied to the income when the business prepares its annual income tax return. More importantly, the separation of income into categories allows business owners to properly analyze factors that affect increases and decreases in revenue by income source.

Service-oriented businesses do not sell products. Instead, they deliver services for fees that are usually set by contractual agreements. For example, accounting and law firms deliver professional services for fees. Those services make up most of the firm's revenue, rather than the proceeds from the sale of products. These fees are tracked in a revenue account called fees earned. The label effectively identifies the nature of the money collected in that account.

Companies generate financial statements to present their financial condition for regulatory purposes, to attract investors, to borrow money and for many other reasons. The income statement, part of the standard group of financial statements, lists the company's revenue and expenses by category over a certain time period. One of the categories under revenue is fees earned, which would show up on the income statement of any company that has income generated from that source.

There are a few particularities about the fees earned category that affect businesses with primarily fee-based income. A business can manage its accounting on an accrual basis, or on a cash basis. Accounting by accrual means that revenue is recognized when it is earned, while cash basis accounting recognizes revenue when it is received. Many businesses that generate income through fees use accrual-based accounting, so they can record fees earned when work is performed for the client, rather than when the bill is paid. The decision whether to record fees earned using the accrual method or the cash method can have significant tax implications for a service-oriented business.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.