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HIPSTER31405
Level 2

Commission for Sale of Service vs. Purchasing Service from Provider

We have partnered with a trainer that will come to our facility and lead small groups - for example, (4) 1 hour sessions on a Saturday.  My company accepts payment, provides the facility, promotes the event, etc.  He facilitates the training.  We charge $100 per attendee and divide the income 50/50.  I'm debating which is the better option: 1)Record the income as a Sale of Service and pay the trainer a commission of 50%. or 2) Purchase the service from the trainer and treat the the payment to him as COGS.  Any thoughts? 
Solved
Best answer January 05, 2019

Best Answers
Rustler
Level 15

Commission for Sale of Service vs. Purchasing Service from Provider

the customers are paying you, that is your income
you pay the trainer, that is your expense, it is not cogs, there are no goods being sold

you should track the trainer as a vendor eligible for a 1099 just in case he gets paid $600 a year or more in cash or check

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3 Comments 3
Rustler
Level 15

Commission for Sale of Service vs. Purchasing Service from Provider

the customers are paying you, that is your income
you pay the trainer, that is your expense, it is not cogs, there are no goods being sold

you should track the trainer as a vendor eligible for a 1099 just in case he gets paid $600 a year or more in cash or check

HIPSTER31405
Level 2

Commission for Sale of Service vs. Purchasing Service from Provider

Thank you, Rustler.  

Rustler
Level 15

Commission for Sale of Service vs. Purchasing Service from Provider

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