Question on How to Calculate Net Profits

[Valencia Vending LLC]

Greetings all, 

We are fairly new to the full line vending business, we've only been in business 3 months. We are signed up to pay one of our locations a 10% commission on our net profits. How do we go about calculating that considering that every item sells for a different price and has a different profit margin? We are meeting with a bookkeeper on Friday, so we are bringing in a professional. However, I feel like I am probably overthinking it and I could most likely do it myself with a little guidance. 

I appreciate the assistance. 

[Golfdogs]

The few commissions I pay are off of Gross Profit.  Of course, I deduct sales tax and credit card expenses and pay off of that 'gross'.  

[AZVendor]

The easiest way to pay it is off of the gross sales.  That is how it's traditionally done regardless of your expenses.  If you want to pay some sort of net then subtract only what expenses are easy to attribute to that account such as the items Chris mentioned.  Most of your other expenses are variable and very difficult to attribute to one account.  Why is your commission off of net?  Did you think that was a good idea or did someone else determine it?

[joshnosh]

GROSS SALES

MINUS 50-55% Cost of Goods Sold

MINUS  Sales Tax

Easy peasy.

[Fermo Vending]

How do you calculate both? I'm fairly new to this game as well. I always assumed net would cost the business less money overall, or am I mistaken?

 

[joshnosh]

Gross Sales  = $1000

Minus cost of goods

[joshnosh]

Net sales should cost you less.

Gross Sales  = $1000

Minus cost of goods = $500

Minus Sales Tax (7% in NC)  = $70

Net Sales $430