New Business

[pmedders]

Client started up a part-time business selling vitamins as a direct distributor. She received a total of $177.51 from company for the year and received no 1099 (she began business in the last few months of the year). The breakdown of her check shows:

Commissions IRS Total Fees RSP Net Total
56.51 56.51 -15.00 136.00 177.51

(RSP stands for retail sales profit)

I am being told she is to only claim the $56.51 as income (that is what was reported to IRS). I don't know why the company would be advising their direct distributors that they only have to claim commissions. Has anyone dealt with this? The company is called National Safety Associates and I am told has been in business for 30 years.

[Brian EA]

Client started up a part-time business selling vitamins as a direct distributor. She received a total of $177.51 from company for the year and received no 1099 (she began business in the last few months of the year). The breakdown of her check shows:

Commissions IRS Total Fees RSP Net Total
56.51 56.51 -15.00 136.00 177.51

(RSP stands for retail sales profit)

I am being told she is to only claim the $56.51 as income (that is what was reported to IRS). I don't know why the company would be advising their direct distributors that they only have to claim commissions. Has anyone dealt with this? The company is called National Safety Associates and I am told has been in business for 30 years.

Report the entire amt. It's not very much anyway

[Gretel]

What about her purchases? Are they figured in in any way? She must have inventory or does she not order anything and just talkes to people.

[pmedders]

Inventory

There is no inventory handled by her. Basically she is a sales person who is paid commission on sales that she brings in, but does not handle product at all. She sends in orders and company sends product directly to customers. That is why I am confused with the retail sales profit paid to client. Another sales person advised client all client has to claim is the commissions as this is all that is turned into IRS, but client is receiving additional monies under the RSP. I know this year, numbers are very small, so won't make a difference, but would like to set it up correctly to begin with. My brain is telling me all has to be claimed as income (commission plus RSP less fees), but client is being told differently.

[Gretel]

Yes, I agree, I would want to find out how to report it correctly for this year and future years. And all looks like income to me. Would be interesting though to find out why company reports only part to IRS.