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    Reseller commissions
    Hi I'm a noob,

    Please forgive my acounting ignorance.

    I am a distributor who sells product to resellers in different countries. I would like to give my resellers a commission for their sales. My question is, is it better to sell the product to them at the regular price, have them pay me in full and then cut them a check for their commission, just to have that money track on the books, or is it o.k. to do things the easy way and just charge them less.
    Does it matter to banks or for tax reasons?

    Any help you can offer is greatly appreciated.
    Many thanks!


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    Re: Reseller Commission Structures
    Both approaches are tenable.

    We actually do the latter. We have a special purchase link for each reseller so that they can procure at the reduced rate directly. The reason is simply that it is easier for us to do this from an accounting perspective in that we simply treat it as a sale (with no calculation or further transaction needed downstream).


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    Re: Reseller commissions
    Makes sense, thank you. Do you know if you have to file any special tax forms for sales outside the US?


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    Re: Reseller commissions
    I don't think so.... but there may be something needed in the annual return. Hopefully someone will pop along and confirm.


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    I think you would be better off if you charged less from them as it would reduce the amount of paperwork and effort required from both ends. It would also reduce the effort of calculating the amount of commission due to them. You would also benefit in the sense that you won'y have to maintain an extra account in your books with regards to the commission. I would also recommend you to introduce a cash discount as an added incentive so that they clear their dues in time.


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    Charging them less would certainly seem like the easier way to do it. The other way requires a lot more work from your end and will probably result in more paperwork.


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    I also think both have their ups and down sides. If you let them pay less, you have less paperwork. I would go with charging them in full and letting giving them a commission afterwards because this way they don't just buy a lot of products cheap and risk having too much stock and not being able to pay you.


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    It will be a difficult task on hand considering the dates involved. Having that one will surely be a challenge. - Steven C Wyer


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    www.adabba.com - It will certainly be better to charge them less, it will help your productivity, and reduce the stress you have to go through.


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    thanks for sharing with us


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