Affiliate commission and tax

Hi,

This might sound like a pretty basic question but I'm going to ask it anyway...;-)

As an affiliate *merchant* that pays my affiliates the agreed commission, come tax time I assume that I can class all of these commission payments as a business expense?

Further to this, I am considering taking complete control and managing my affiliate program "in-house" rather than use the services of something like ClickBank...

...if I were to ever use ClickBank though, lets say that I sell a product for $50 and offer 50% commission ($25), where do I stand in terms of being able to claim commission paid as an expense? My guess is that I can't, as when you sell something through ClickBank, technically hasn't ClickBank already first brought my product from me?

Regards,
Adam

Adam:

Speak to your accountant about it.

He (she) might not understand "affiliate" as it relates to online. So you will have to explain it to him in offline terms.

Such as... a salesman who takes the order and money, removes their cut and then passes the rest on to you.

MY take on it... not being an accountant... is that you cannot claim an expense you didn't incur. And this fits that... clickbank takes the money on your behalf, removes their part and then sends you the remaining amount.

With handling your own affiliate payments... it does become an expense because you get all the money and then spend some of it. Just like processing a credit card with your merchant account - you get the money and then later the credit card fee is taken out of your account.

Remember... I am NOT an accountant and this is NOT accounting advice. For proper accountig advice see an account - and for legal advice see a lawyer.

Michael Ross


For businesses see here

....your interpretation is much-aligned with mine but yes, I will get professional clarification on this.

Thanks again!

Adam

> Adam:

> Speak to your accountant about it.

> He (she) might not understand
> "affiliate" as it relates to
> online. So you will have to explain it to
> him in offline terms.

> Such as... a salesman who takes the order
> and money, removes their cut and then passes
> the rest on to you.

> MY take on it... not being an accountant...
> is that you cannot claim an expense you
> didn't incur. And this fits that...
> clickbank takes the money on your behalf,
> removes their part and then sends you the
> remaining amount.

> With handling your own affiliate payments...
> it does become an expense because you get
> all the money and then spend some of it.
> Just like processing a credit card with your
> merchant account - you get the money and
> then later the credit card fee is taken out
> of your account.

> Remember... I am NOT an accountant and this
> is NOT accounting advice. For proper
> accountig advice see an account - and for
> legal advice see a lawyer.

> Michael Ross

Since I am an accountant. I worked for the monster called the IRS for a lot of years leaving in 1992.

Let see the credit card company does not buy your product or service. It may collect for you but that is all.

Let say you collect all the money less the fees to city bank. You pay your sales people $50 and you keep $50. You received $100 the sale was for $110 and the bank took $10 sending you $100.

If you show the $100 in your return you can deduct $50 for commissions.

If you show $50 you can deduct nothing. I hope that helped.


http://www.Joetrevison.com

> Let see the credit card company does not buy
> your product or service. It may collect for
> you but that is all.

Actually, ClickBank does buy the product from the seller. It then resells it to the buyer. That is how the ClickBank model is set up.

Basically what happens is you send your customer to ClickBank. ClickBank verifies that the customer has the means to purchase the product (ie: they verify the credit card). Then ClickBank purchases your product for 92.5% of retail minus $1.00 and resells it to the customer for full retail. They then credit your account and any affiliate account.

This process alleviates the need for the seller to have their own merchant account.

The best offline analogy I can think of for Clickbank is a consignment shop. The shop processes the sale, takes their cut and passes the rest on to the seller.




Finally -- You Can Download and Manage Your ClickBank Sales Data Offline

I learn something every day. In that case you the seller that gets credit to your account by city bank reports only the money the bank credits your account for. They do all the work, nice.


http;//www.Joetrevison.com