Tax Question on Commission website


1

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

Tax

asked Jul 12 '11 at 00:19
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Sk24iam
344 points
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1 Answer


2

For example, Ebay charges buyer total sale price for item, then sends money to seller, and
charges seller a commission.

Ebay 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.

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?

You have to track all income (full price) immediately with a "debt" towards the real seller if you do that (eBay does not).

Otherwise you do not reflect your real obligations. If, for example, the money gets stolen somehow, you still have to pay the seller.

answered Jan 11 '12 at 06:07
Blank
Net Tecture
11 points

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