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PDtax, CPA, MBA
Category: Finance
Satisfied Customers: 4308
Experience:  Tax professional and business consultant for 35 years.
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# I just recently started a wholesale car business. I did all

### Customer Question

I just recently started a wholesale car business. I did all the necessary things to make it legitimate. My friend opened up a retail car dealership. She needed inventory and I thought it was a good way for me to get my feet wet in the business. Especially since I have a full time job that I am going to be transitioning out of not soon but it's coming. So she said she could be a representative for me at the auction and she would pick the cars and consult me and she would pay the curtailments and repairs. If she made a sale on a car that was \$7000 or over my commission is \$500 and below \$7000 is is \$400. Does this seem fair?
Submitted: 1 year ago.
Category: Finance
Expert:  Jawwaad Ahmed replied 1 year ago.
If the commission is \$500 it is around 7% of value and if it is \$400 it will be around 5.7%. But the question is why the commission is paid to you, is it for the amount of money you have invested. Then you have to calculate return on investment if suppose your investment is \$25000 for one year and there you receive commission of an amount of \$3600 (500*4 + 400*4) in a year it means that the return on investment is 3600/25000 = .144 or 14.4%, now you have to compare this 14.4% with the return on investment you can earn from another opportunity, if suppose you can put this money in bank or you can buy the stocks from stock exchange. If your return on investment from other opportunity is lower than 14.4% then this is justifiable, otherwise you can negotiate for better commission.
Expert:  PDtax replied 1 year ago.