Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

US taxation and sales tax issueI started ebay business with

Second opinion] US taxation and...
Second opinion] US taxation and sales tax issueI started ebay business with a Korean relative. We don't have a partnership agreement. The partner has an paypal and ebay account, gets a sales order, and let me dropship the orders. I ship the order items to the buyers. My entity is sole proprietorship in CA, and the partner is just an individual, not business entity. I am going to bookkeep the sales and the expense into quickbook.After sales, the partner transfers the sales amount of 75% to me. In our business, how can I set up the income and the expense? For example, a camera was sold for $100, and $75 was transferred to me, and $25 was the partner's commission. COG was $25. Should I register $100 as income or $75 as income? How about the sales tax if the sales order comes from CA? Thanks.
Show More
Show Less
Ask Your Own Tax Question
Answered in 1 hour by:
11/3/2017
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,311
Experience: Taxes, Immigration, Labor Relations
Verified

Indeed - the information you provided describes an agreement between you and your partner.

In-fact you are partners and do have an agreement.

A partnership is the relationship existing between two or more persons/entities who join to carry on a trade or business. Each person/entity contributes money, property, labor or skill, and expects to share in the profits and losses of the business.

You would need to account for all business activities as for the partnership - that is based on your business model.

As long as you are located in CA - the partnership will be subject to CA sales tax.

Ask Your Own Tax Question
Customer reply replied 1 month ago
We are using paypal for business transaction, and My partner is registered as non-us resident, and he is not allowed to collect the sales tax, I think. Is it correct setting? Initially, my partner set up to collect sales tax, but after PayPal requested the verification of us entity, we changed it. Should we still collect the sales tax?

Neither of you are allowed to collect sales tax without registration.

You need to register with your state authorities.- and only after that will be allowed to collect sales tax.

If you do not want to be considered as a partnership - you would need to change your business model.

Ask Your Own Tax Question
Customer reply replied 1 month ago
My partner is an individual seller on eBay, and I am registered as a sole proprietorship in CA.

When you run separate businesses - that is OK - and each of you will act as a sole proprietorship.

But when you run business TOGETHER - and share profit - that is a partnership - and that creates an additional taxing entity.

Ask Your Own Tax Question
Customer reply replied 1 month ago
After complete sales, the parter transfers the funds to me. As I said above, I said that we are completely separate as I own 100% of my business. Even in that case are we still in the partnership like LLP? I am pretty confused. Thanks.

You are correct - that you and physical person and your partner - each are separate entities for tax purposes.

These are two separate businesses and each of you own 100% of corresponding solo proprietorship.

For instance - if you sell or provide services to YOUR customers - customers pays YOU - and that amount is included into YOUR gross income.

However - when your partners pays you - that payment is different - that is not a payment from teh customer - but a payment from a partner based on your agreement to run some business activities jointly and divide profit as you both agree.

THAT agreement resulted in new entity - the partnership - regardless if you officially registered that entity - the IRS and other taxing authorities will view that agreement as a partnership and generally - you would apply for a separate EIN with the IRS.

If for instance - you will ask teh same question to your state taxing authorities - they will view this agreement as a partnership and will hold you responsible for sales tax.

Ask Your Own Tax Question
Customer reply replied 1 month ago
How can I set up a separate EIN for the partnership? Since my partner is non-us entity, can he still collect the sales tax?

How can I set up a separate EIN for the partnership?

The partnership is based on the agreement - there is no requirements to register the partnership in order to form it.

A partnership is the relationship existing between two or more persons/entities who join to carry on a trade or business.

To apply for EIN - use form SS4

https://www.irs.gov/forms-pubs/about-form-ss-4-application-for-employer-identification-number-ein

or apply online

https://sa.www4.irs.gov/modiein/individual/index.jsp

Since my partner is non-us entity, can he still collect the sales tax?

Yes - when a nonresident alien needs to collect sales tax - first step to apply for the tax ID with the IRS, and after that - register with the state taxing authorities where sales taxes will be collected.

Ask Your Own Tax Question
Customer reply replied 1 month ago
Does my partner abroad need to set up EIN number? If he needs to collect sales tax abroad, how can he pays sales tax to the tax authority?

Does my partner abroad need to set up EIN number?

If you partner will be receiving income from US sources - yes - he need to have a tax ID - that woudl be EIN if the partner is a legal entity or ITIN for a physical person.

If he needs to collect sales tax abroad, how can he pays sales tax to the tax authority?

Each state collects sales tax separately - sales taxes are paid by buyers - the seller collects all these amounts and pay either directly or by sending a check.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,311
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,311
30,311 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,336 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,906 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
I'm in the state of Florida and required to sales tax on
I'm in the state of Florida and required to sales tax on Fabrication - how do I determine what percentage of a manager's salary is considered taxable under the fabrication rule … read more
Lev
Lev
Tax Advisor
30,311 satisfied customers
Self employed, Im wondering if inmigration uses gross income
Self employed, Im wondering if inmigration uses gross income or net income for their figures... I make about 70,000 gross income on 1099 but after deductions net income is about 32,000.. we are a fami… read more
Lev
Lev
Tax Advisor
30,311 satisfied customers
Resident Alien - Married couple - one is US citizen and the
Resident Alien -Married couple - one is US citizen and the other is Canadian but is US resident alien.If couple purchases a house as their primary resident, is there any tax implication outside of the… read more
Lev
Lev
Tax Advisor
30,311 satisfied customers
I have a question about sales tax as it pertains to an
Hi I have a question about sales tax as it pertains to an ecommerce site. The company is registered and filled in Delaware under the name OFPOISON LLC with a registered agent and we now have an Federa… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,906 satisfied customers
Form 8300. We are doing a business to business transaction.
We are doing a business to business transaction. The form is not clear on how to compete. Do we complete Part I f … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I own a business in Kentucky and owe state sales tax to the
I own a business in Kentucky and owe state sales tax to the state of Kentucky. Can the state of Kentucky place a lien on my home in Pennsylvania jointly owned by me and my wife … read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
What is the statue of limitations for restaurant sales tax
what is the statue of limitations for restaurant sales tax delinquency in Virginia and can you discharge it in bankruptcy?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,567 satisfied customers
In New Jersey, are sales taxes applicable for consulting services?
In New Jersey, are sales taxes applicable for consulting services, billed on a hourly basis?… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,906 satisfied customers
US taxation and sales tax issue I started ebay business with
US taxation and sales tax issueI started ebay business with a Korean relative. We don't have a partnership agreement. The partner has an paypal and ebay account, gets a sales order, and let me dropshi… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,567 satisfied customers
Question regarding taxation of partnership distributions and
Hi, question regarding taxation of partnership distributions and capital gains … read more
Richard
Richard
Tax Attorney
Doctoral Degree
4,336 satisfied customers
2 Questions: SALES TAX COLLECTED and GROUPON SALES Does
2 Questions: SALES TAX COLLECTED and GROUPON SALESDoes Sales tax get reported on the Corporate Tax Return (1120) as part of Gross Receipts or Sales?I just got an IRS bill because I did not include Sal… read more
abci168
abci168
Principal
27 satisfied customers
What is the current NY State sales tax on materials and
What is the current NY State sales tax on materials and labor? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Multi State Taxation 1. Taxpayer is incorporated in one
Multi State Taxation1. Taxpayer is incorporated in one State and also has certificate of authority to work in another state. However, entity has employees and processes and files payroll tax return in… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
If Nevada is successful in domesticating a state sales tax
If Nevada is successful in domesticating a state sales tax debt in North Carolina, what is the limit of wage garnishment for that debt… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
842 satisfied customers
A Nonresident Alien just took steps towards becoming a a
A Nonresident Alien just took steps towards becoming a a U.S. Permanent Alien in June 2017. He is an airline pilot with a tax home in Hong Kong. He has a Mandatory Provident Fund established with the … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,906 satisfied customers
If person A sales a used car to person, is a sales tax
If person A sales a used car to person B, is a sales tax required to be paid by either party? … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,251 satisfied customers
My friend is a nonresident alien student in the US. If he
My friend is a nonresident alien student in the US. If he receives a wire transfer from his home country, am I correct that is nontaxable income, and does it matter whether the money comes from his ow… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Regarding Form 1040NR US nonresident alien income tax
regarding Form 1040NR US nonresident alien income tax return: where do you report U.S bank interest on the form… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x