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Level 1

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

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

1 Best answer

Accepted Solutions
Employee Tax Expert

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

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.

 

 

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1 Reply
Employee Tax Expert

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

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.

 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

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