I own a consignment business that handles 35-40 consignors (2 member LLC. reporting as a partnership). When I sell an item, I have been recording the shop commission as income and the amount due the consignor as a current liability. I track the income/liability separately for each consignor. Now that I am getting an annual 1099-K, I realize I should have asked this question a while ago!! The 1099-K shows total credit card processing. If I report 1065 income that only shows the income I realized from the commissions, it's sure to trigger an IRS inquiry. Should I add my actual income to the consignor payouts and report that on the 1065? How do I then reduce that amount on the 1065 to reflect my net income. Going forward, How should I change my chart of accounts to correctly account for the income to the shop and the amount due to the consignors (paid at the end of each month). Thanks, Bill
