Which is the right category, Membership Fee or Commission Sharing?

[Adyer95]

Hello,

I started my home inspection business this year and was trained and provided help through another inspection company. I am a solo-proprietor and have my own business. The guy that helped train and continues to help me has his own as well.  I give him 5% of my monthly earnings in return for the training and the continued help, I pay this at the end of every month. Would I file this as a sort of membership (legal and professional fees), or would i give him a 1099-MISC and file it as commission sharing?

Thank you for any help

[HelenC12 · Accepted solution]

Give him a 1099-MISC form. Enter the amount in Box 3, Other Income Payments.

• Quick Employer Forms helps small business owners like yourself quickly and easily create 099-MISC. For additional information, click here. 

Per IRS instructions, file Form 1099-MISC for each person to whom you have paid during the year:

• At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
• At least $600 in:
  • Rents.
  • Services performed by someone who is not your employee.
  • Prizes and awards.
  • Other income payments.
  • Medical and health care payments.
  • Crop insurance proceeds.
  • Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish.
  • Generally, the cash paid from a notional principal contract to an individual, partnership, or estate.
  • Payments to an attorney.
  • Any fishing boat proceeds.