Vendor Co-Op Funds

by Kenneth Hoffman in , ,

Many manufacturers and wholesalers provide funds to their distributors and retailers for advertising, demo equipment, point-of-purchase displays, etc. Generally, it's free money. There may be strings attached such as how the money can be used, that products from competing suppliers can't be advertised on the same page, etc., but for the most part the restrictions aren't onerous.

Make sure you know the rules. The amount you receive is often based on your volume with the supplier over a 3, 6, or 12-month period. You usually have a certain amount of time to use the money and file a claim. Make sure someone is in charge of the program so you don't lose out.

Finally, keep in mind that any amounts you receive constitute taxable income. But, of course, that will be offset by the cost of the ads, etc. If you're a manufacturer or supplier, you might consider instituting such a program for dealers.

If you have any questions about this topic, tax law changes, business tips, or how to become a client, please call us at 954-591-8290 or use our Contact form. 

Credit Card Reporting for Tax Purposes Debuts This Month

by Kenneth Hoffman in ,

Yep, there’s a new form from the IRS out this year and one might be landing in your mailbox soon. The federal form 1099-K, Merchant Card and Third Party Network Payments, will debut early this year: forms 1099-K are due to merchants by January 31, 2012. Electronically filed 1099-Ks are due to the IRS April 2, 2012 (normally March 31), while paper 1099-Ks are due February 28, 2012.

So what is the new form 1099-K? It looks like this (downloads as a pdf and yep, no longer in draft form!).

And here’s how it will work: certain payments for goods and services paid by credit card or third party merchants will be reported to the IRS via the form 1099-K. A reportable payment transaction is a transaction in which a payment card (such as a credit card or gift card) is accepted as payment or any transaction that is settled through a third party payment network like PayPal. It does not include ATM withdrawals, cash advances against a credit card, a check issued in connection with a payment card, or any transaction in which a payment card is accepted as payment by a merchant or other payee who is related to the issuer of the card.

In plain talk, this means that taxpayers who have a credit card merchant account, Paypal account or similar account and otherwise meet the criteria will receive form 1099-K from their service provider. That would include professionals like lawyers and architects who accept online or credit card payments for services, freelancers compensated via PayPal and etsy sellers, affiliates, eBay merchants and other small businesses who accept credit cards, debit card or PayPal as payment for their wares.

But not every dollar will count. Reporting is only required when gross payments to an individual payee exceed $20,000 for the year and when there are more than 200 transactions with the participating payee. So the occasional sale of a crocheted toilet paper roll cover over the internet? Not likely to merit the issuance of a 1099-K. But a successful online store? That’s another story.

Continue reading at Credit Card Reporting.

How to Overcome the Holiday Revenue Blues

by Kenneth Hoffman in

Attorney Lee Rosen over at Divorce Discourse has a good post on how to overcome the holiday revenue blues.

In my practice, where we charge fixed fees for everything, December can be difficult. Revenues are affected by the holidays. My revenue anxiety often disrupts my holiday sleep. I wake up dreaming of bankruptcy judges and debtor’s prison.

Continue reading here.