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Commissions paid before or after tax

By Starbucksne1 ·
Hello guys!

I have a financial question,

When a sale is made for any amount lets just say that it was $100.00 and its taxed (8.25%) $8.25 and the sale is brought back to the office.
#1 Is the sale counted as $100.00 or $ 108.25.
#2 Is the commission paid before the taxation or after

Is there any type of law or anything that says how this is handled?

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Commissions paid before or after tax

by Ann777 In reply to Commissions paid before o ...

Generally... commission is paid on the sub-total of the order. The commissionable amount does not include shipping charges or sales tax.

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Commissions paid before or after tax

by Ann777 In reply to Commissions paid before o ...

Commission is earned on sales of items, not on incidentals that US government or local/city/state policies may or may not be charging (there are still a few states that do not charge any state sales tax to consumers).

There's probably a law confirming this... but since I'm not a lawyer... I cannot refer you.

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Commissions paid before or after tax

by Starbucksne1 In reply to Commissions paid before o ...

The question was auto-closed by TechRepublic

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Commissions paid before or after tax

by TheChas In reply to Commissions paid before o ...

I agree with Anna.

I don't know if there is a specific law governing this either.

I do know that the IRS, and most resteruant guide books calculate tips based on the before tax sub-total.

So, I expect that any IRS rules or guides on comissions would be set up the same way.

Look at it this way;
Your firm is working as an agent for the local government when you collect the sales tax.
The firm does not get any benefit or profit from the collection of sales tax, so there is no margin to pass on as comission.
Further, except to account for the proper collection and distribution of the sales tax revenue, it is not part of any 'standard' business financial statements.

Chas

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Commissions paid before or after tax

by Starbucksne1 In reply to Commissions paid before o ...

The question was auto-closed by TechRepublic

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Commissions paid before or after tax

by Starbucksne1 In reply to Commissions paid before o ...

This question was auto closed due to inactivity

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