Tax Question on Commission website
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If an online business is simply the middle man(ebay) do they have to report their sales as the total sale price of the items sold or just their commission?
For example, Ebay charges buyer total sale price for item, then sends money to seller, and charges seller a commission. For this type of model, is it required that you report the total sale price and write off the money you are sending to the seller, or can you simply just report your earnings from commission percentage?
Thanks
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This is a question better suited to an accountant. – Joseph Fung 13 years ago
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Ask an accountant. It's the only way that you can be confident that you're acting within the law, and not setting yourself up for a world of hurt later on. – Nickh 12 years ago
1 Answer
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For example, Ebay charges buyer total sale price for item, then sends money to seller, andEbay is an advertising + payment system. EBay does not collect the money. Paypal may be said to do so, but obviously never for themselves. Ebay will send the seller an invoice for the comission. The seller has to pay it.
charges seller a commission.
For this type of model, is it required that you report the total sale price and write off theYou have to track all income (full price) immediately with a "debt" towards the real seller if you do that (eBay does not).
money you are sending to the seller, or can you simply just report your earnings from
commission percentage?
Otherwise you do not reflect your real obligations. If, for example, the money gets stolen somehow, you still have to pay the seller.
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