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Reseller Fees COGS

I work for a small software company and we recently sold one of our packages to the government of Nigeria. We went through a third party reseller and before transferring the payment to us They took a substantial "commission". I want to book this to Cost of Goods and my salesman is arguing it's just an expense. Which of us is right.

Answers

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Commissions are a sales expense, not a cost of goods sold.

If the selling commission was not related to the main business (like selling off furntiure (you are a software company), then it would be booked to "Other Expenses".

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