amc-vending Posted February 19, 2011 Share Posted February 19, 2011 I am buying several rack and know that I will have to be paying commissions to some of my new locations. BUT I want to know how other vendors account for the commissions on the books. Some pay them out of the cash they collect others mail a check to them or drop it off the next service cycle. BUT how to you account the amount you pay out in commissions on your books or not. I.e. If you collect 100.00 from a machine and give location 20.00 commission, do you record only 80.00 in sales or do you show 100.00 in sales and expense out 20.00 in commission. thanks Link to comment Share on other sites More sharing options...
Hillbilly Posted February 19, 2011 Share Posted February 19, 2011 I record the full amount and the commission payout in cash is recorded as an expense. Link to comment Share on other sites More sharing options...
The Mage Posted February 19, 2011 Share Posted February 19, 2011 Yes, I consider the commission an expense. Hopefully the locations won't have a problem if the IRS looks at my books. But I am not going to fool around with the IRS. (They some scary people.) Link to comment Share on other sites More sharing options...
amc-vending Posted February 19, 2011 Author Share Posted February 19, 2011 that is what I was thinking also Do you pay off the adjusted gross ie here in AZ the tax is 9.5% so take the gross and deduct the taxes due then pay off that gross or just the total gross amount before taxes ? Link to comment Share on other sites More sharing options...
The Mage Posted February 19, 2011 Share Posted February 19, 2011 Each person is different. It is simplest to pay off of gross. But with net you can deduct anything you want. Tax, product, gas, etc. For me the only reason I can see paying net is because it looks better to the location. Some people will prefer 50% of net over 25% of gross, even though it is possible to pay less commission on the 50% then 25%. (Ain't that strange math.) Link to comment Share on other sites More sharing options...
hutchdavidson Posted February 19, 2011 Share Posted February 19, 2011 proper accounting would record the full revenue then record the expense. Link to comment Share on other sites More sharing options...
minivend Posted February 19, 2011 Share Posted February 19, 2011 I wonder how many operators know what their average cost per sale is? How many know what their net profit per $1.00 generated is?? Very important things to know when you start talking commission.. For those who arent number oriented..I would suggest picking up a basic accounting book and reading it..Also, spend a few bucks and talk to an accountant.. Link to comment Share on other sites More sharing options...
nepavend Posted February 20, 2011 Share Posted February 20, 2011 Always record full gross revenue and deduct the commission as an expense. It is a fully tax deductible business expense. Also do not be shy about talking with an accountant especially your first year in business to get a crash course on things you need to do for your taxes. Each state, even county or city could be different so make sure it is someone in your hometown. This cost, if any would be deductible as well. You also need this info to track your margins, gross and net, as well as many other stats that will be useful to you. Knowledge is power, and especially when it comes to your numbers. Knowing and understanding them is key to your success. If you have limited knowledge in this area, you can read up online or at the library or Barnes and Noble, etc. I think you can tell I cannot stress enough, knowing your numbers is critical to your success. Link to comment Share on other sites More sharing options...
amc-vending Posted February 20, 2011 Author Share Posted February 20, 2011 Always record full gross revenue and deduct the commission as an expense. It is a fully tax deductible business expense. Also do not be shy about talking with an accountant especially your first year in business to get a crash course on things you need to do for your taxes. Each state, even county or city could be different so make sure it is someone in your hometown. This cost, if any would be deductible as well. You also need this info to track your margins, gross and net, as well as many other stats that will be useful to you. Knowledge is power, and especially when it comes to your numbers. Knowing and understanding them is key to your success. If you have limited knowledge in this area, you can read up online or at the library or Barnes and Noble, etc. I think you can tell I cannot stress enough, knowing your numbers is critical to your success. That is what I am doing now - except Right now I don't have to pay any commissions to any of my accounts including my full line accounts. I use a accounting program to track sales, expenses, cogs, etc but I also have several spreadsheets that I update each month to keep close eye on my numbers and do "what if's" i.e if I increased my route to x amount of machines based on my sales, margins etc - how much it would cost me and what the ROI would be. Link to comment Share on other sites More sharing options...
Guest ontheballvending Posted February 22, 2011 Share Posted February 22, 2011 Allen, Remind me I will send you a spreadsheet, so you can list each location, their monthly gross income, and the pay out or the expense you are paying each location. I vary from 20% to 35%. You record the gross amount in the gross income column, and the amount paid out to the location next to it. TTYL, Scot Link to comment Share on other sites More sharing options...
agrantha Posted March 1, 2011 Share Posted March 1, 2011 Always record full gross revenue and deduct the commission as an expense. It is a fully tax deductible business expense. Also do not be shy about talking with an accountant especially your first year in business to get a crash course on things you need to do for your taxes. Each state, even county or city could be different so make sure it is someone in your hometown. This cost, if any would be deductible as well. You also need this info to track your margins, gross and net, as well as many other stats that will be useful to you. Knowledge is power, and especially when it comes to your numbers. Knowing and understanding them is key to your success. If you have limited knowledge in this area, you can read up online or at the library or Barnes and Noble, etc. I think you can tell I cannot stress enough, knowing your numbers is critical to your success. I don't see how you guys are making any money paying commission. I would rather collect $50/mth from gumballs and pay a charity $1/mth. Commissions cut too deep into profit unless the location does at least $150 per month. And still I would be reluctant to pay commission. Link to comment Share on other sites More sharing options...
quotealex Posted March 1, 2011 Share Posted March 1, 2011 Try getting many good locations thru charity. Paying commissions gets your machines in alot more places.... I don't see how you guys are making any money paying commission. I would rather collect $50/mth from gumballs and pay a charity $1/mth. Commissions cut too deep into profit unless the location does at least $150 per month. And still I would be reluctant to pay commission. Link to comment Share on other sites More sharing options...
nepavend Posted March 1, 2011 Share Posted March 1, 2011 Unfortunately, Commissions become a cost of doing business, and with any top-flight location, it is mandatory to get and keep locations of good quality. The best you can hope for is to pay 20-30% gross and not have to count everything in front of them, maintaining some control over what exactly you pay. Link to comment Share on other sites More sharing options...
will.vend Posted March 1, 2011 Share Posted March 1, 2011 I don't see how you guys are making any money paying commission. I would rather collect $50/mth from gumballs and pay a charity $1/mth. Commissions cut too deep into profit unless the location does at least $150 per month. And still I would be reluctant to pay commission. I guess you will hafta stay home on the porch! Link to comment Share on other sites More sharing options...
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