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Lane, I have an accounting & tax questions for you. I have a…

Hi Lane,I have an accounting...
Hi Lane,I have an accounting & tax questions for you. I have a client who owns an antique shop. Within this business he allows other vendors to sell their antiques. My client receives in the money for the items sold (owned by the other vendors) and then pays out out the money to the vendors at the end of the month less Sales Commission. My client is a Single Member LLC. So he is subject to the California Franchise Tax which is the minimum $800 plus a percentage of his Gross Income. What I've done is included the Other Vendor sales income into his Gross Income...and then reduced it with the pay outs through COGS. I'm trying to determine whether or not I am correct in doing it this way. Because it's basically causing my client to pay extra tax through his LLC for California. Should I just be running the Income & COGS through one line item in COGS so that he is not paying extra tax? Please advise.Thanks,Kathleen
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Answered in 2 minutes by:
10/17/2017
Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 14,679
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Yep, you can either do it that way OR simply show the commission.

...

What this is, is consignment sales. The inventory should really be being accounted for by the seller.

Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 14,679
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Finance Specialists are ready to help you
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Customer reply replied 9 months ago
Okay excellent, ty Lane!
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