Accounting tax question

[stag]

Hi everyone,

I need some advice with those more knowledgeable with a little issue I have to do with sales and taxation.

Quick rundown – I operate my biz as a partnership. My area is clothing and some of the stuff I create is collaboration with others. At present, they get a cut of the revenues for every sale, thus I don’t see any of the cash, I just distribute it once it has reached a certain level. Is this amount liable for taxation or can I easily just wipe this as an expense or something similar and if so, how would be the best way of going about it?

Cheers all

[mangoprint]

You will probably need to be more specific with amounts etc.

[elainec100@cheapaccounting]

If I have understood your set up correctly - you pay royalties?

These royalties would be a cost of sale in your accounts.

[stag]

If I have understood your set up correctly - you pay royalties?

These royalties would be a cost of sale in your accounts.

Yes, i guess these are Royalties. At present i was taking away costs then forwarding a % of the profits. From what I understand, I should take this away as a cost first before leading to profit?

[DVWooly]

there is a line in the P&L - Cost of Sales

If you only show the slaes figure after the % is taken out your are netting off your transactions

YOu must show the full sale and then % separately as cost of sales


Sales £50,000

Cost of Sales:
Commission £30,000

Gross Profit £20,000