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armedangels3
Level 1

State required fee on some purchases

I work for a gun shop in Nevada and the Nevada Dept of Public safety charges a $25.00 fee for the background check on firearm purchases.  How do I include this in the sale of the gun and not show it as income?

2 Comments 2
Pete_Mc
Community Champion

State required fee on some purchases

It's a fee you collect for yourself or it's a fee you collect and give to the state similar to sales tax?

 

If it's a fee you collect on behalf of the state, I'd put it in a Current Liability Acct and then when you pay the state you deduct it from that account.

 

If it's a fee you collect for yourself, then it is income with a corresponding Expense for the background check you run.

qbteachmt
Level 15

State required fee on some purchases

It Is Income and the Fee you pay is Expense. They net to 0.

 

Don't confuse "no markup" with Not Income. This is all part of being in business. You track everything as Gross. Example:

4 guns + 1 fee = your total sale.

 

You would probably like using a Two Sided Other Charge Item, to show the left side is Expense and the right side is Income. List this on the Sales. Now, when you pay for the Background Check(s), list all the Other Charge Item by Name (job tracking) as separate Entries on the Items tab of that purchase (write check, credit card charge, or enter bill to pay later) and allocate the Cost per name here. This is Not billable, if you already charged them.

 

And now, if you ever need to prove this or report it for yourself, you can run reporting on the item and the names, to see who you collected from is who you had Paid for, too. You can prove the activity is in compliance.

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