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accounting for independent contractor fees & commissions

Accounting For Independent Contractor Fees & CommissionsMy company pays people in retail stores to push my product. We pay them a fee for this, how do I show this in my books - is this a selling expense or under contract salaries?

Answers

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

It can be both- I see two concepts here: Cost Center and Account:
If it is a selling expense, then would you not use your Sales Cost Center rather than Admin?
As to 'contract salaries' it may depend on whether you are paying a true W2 based salary or a 1099 payment that determines if it is a salary v a commission expense.
hope that helps

Topic Expert
Christie Jahn
Title: CFO
Company: Prime Investments & Development
(CFO, Prime Investments & Development) |

You may want to find out what your CPA prefers, but I believe it's your preference. You just need to make sure to give them a 1099. We have a category called Subcontractors; whether you call it subcontractor, contract salaries, etc they are still expenses.

Lynn Zeiner
Title: Business Manager
Company: DME Alliance, Inc
LinkedIn Profile
(Business Manager, DME Alliance, Inc) |

I agree with Christie. Be sure to get their W9 and distribute 1099s year-end. Anyone we provide a 1099 for falls under our subcontractor account. We would consider it an expense rather than a salary since we are not paying payroll taxes on their reimbursement.

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

There is a thread on Proformative that has a lot of input on 1099 v W2 payments and the legal/ tax issues. I think that may help you realize that "contract salaries" could be interpreted as compensation on which you owe payroll taxes.
Lynn's comment above is very relevant to this issue.

Angela D. Gentry
Title: Manager of Finance & Accounting
Company: D&F Marketing Inc.
(Manager of Finance & Accounting, D&F Marketing Inc.) |

I post these payments to contract labor under the product cost center. This type of expense is clearly a selling expense and clearly a contract expense; so your GL needs to be designed to track and report on both.

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