Report all income as gross income (gross receipts; gross sales); mailing cost if is high and major, can be above the line deduction, cost of goods sold; if minor, it is below the line expense, mailing and delivery cost.
We cannot offset. Never offset in recognizing income, especially at the gross sales level.
The reasons for us to suggest so are twofold.
First, in terms of accounting and bookkeeping for your business, all numbers need to be entered into your book to be part of the company activity record. That is what the financial accounting is.
Secondly, in terms of tax reporting, if we don't report the upper line, the highest income number, if the on line payment, credit cards, paypal, etc. issue us 1099s, the total amount can be higher than our reported gross receipts. That is an invitation for an audit.
All the business expenses in a way are passing through the customers, but we have to clearly record all of them.
Please feel free to follow up.
Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP