Direct Selling Bookkeeping

by Tami
(BC, Canada)

Direct Selling Bookkeeping Transactions

My question is simply this:

Do you need to record instances where your customer pays for their order with their own personal credit card, as opposed to paying cash or with a cheque made out to me (the business owner)?

No money is exchanging hands; I simply input their credit card info online and submit it, thus placing the order for them.

I do make a commission of these sales.

So, to record, or not to record, and if so, which accounts do you use, and how do you record it?

Thanks so much. I think I am trying to make it more difficult than it is.

Tami,

It is actually a very good question and I don't have the answer for you ... so I'm posting it to unanswered questions hoping someone else does.

Without knowing more about the process, it's hard to make a decision. I could make an argument both for and against.

Let's start with, how are you recording the similar sales that pay by cash or cheque made out to you?

Comments for Direct Selling Bookkeeping

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Sales Transactions
by: Tami

I will record transactions of this type as product sales I think. I am really trying to keep it simple, and not too complicated. which is why I am trying to figure out if I should include them or not.

CRA's input
by: Tami

I called the CRA and spoke with a senior business advisor, and he said there are no tax laws or rulings that indicate anything about this particular question.

He surmised that, because the payment is going directly to my company, and not I, the consultant, there is no need for me to record such transactions: it stands to reason that the company is responsible for reporting and recording payments of those type, as they are the ones receiving the payment, and that is how the charges appear on those individual's credit cards.

Thanks!

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Tami,

Thank YOU for taking the time to post back with CRA's response. Truly appreciate it and I learned something new today.

Commissions
by: Anonymous

So you are not selling them anything out of your inventory you are simply placing an order for them? Is that correct? If so I would agree that the company who actually gets the income and provides the product would report the income however you mentioned commissions on the sale that are paid to you, are you reporting those?

Commissions
by: Tami

Yes I will be reporting commissions, as the company is required to send out T4As. I will also be reporting any income generated from the small amount of stock I do carry.

Sales transaction
by: CFO

If this is your client and or your business both apply to either entity. A sale increases accounts receivables and increases revenue thus should be tracked in an accounting program such as Quickbooks. All income, expenses are to be reported on the income tax at tax time.

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