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Jodie Burdette

Affiliate Payouts, Tax Time and Bookkeeping

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What is best way to book affiliate payouts and where and how do you write this off at tax time? This would be $$ I pay to those who are affiliates for my products and services.

 

Jodie "I almost had a psychic boyfriend once but he left me before we met." Burdette

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Jodie: Affiliate payouts are a form of commission, which is a deductible business expense. On the 2009 Schedule C, you would have reported the payouts in box 10, "Commissions and fees."

 

Be sure to get a W-9 from each of your affiliates, as you will need to file 1099s for them at year-end if any individual's payouts exceed $600.

 

Deb

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Do you mean send each affiliate a W-9?

Each affiliate to whom you pay $600 or more in a calendar year, yes.

 

Of course all the 1099 rules are changing at the end of 2011, but that's the rule for now :)

 

Deb

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I've never been fortunate enough to get affiliated with someone where I earned even close to the $600. I report affiliate income under "other income" because the payer doesn't have to send me a W-9. I mean 1099 Having them complete one the affiliates complete a W-9 does address the contractor status and does them a favor. Then, it would seem that your accounts would help you keep a quick record of who is meeting the requirements.

 

Someone who is sending that kind of business your way will show up on the radar!

Edited by VA-Judy6

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I haven't worked with Quickbooks since 2003, but couldn't each affiliate have a 'register' which would be connected to a main affiliate register. There should be a formula that you could use to create entries in both places through the code number that each affiliate would have. You might have to have your affiliate program be a separate 'company'.

 

Sure, you can do it in a spreadsheet with similar formulas.

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Jodie

 

Are you asking about which chart of account you need to assign for affiliate payouts?

 

Sincerely,

Linda

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Yes how do I apply the payment (or to what account) so I can generate reports at year end to help me create my 1099's for my affiliates. I can do this in a spreadsheet but i really want to keep everything in Quickbooks if I can.

Jodie "Depression is merely anger without enthusiasm" Burdette

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Jodie

 

If you have an accountant they would be the best one to ask, as I am not an accountant, but I have done bookkeeping for several small businesses.

 

I would imagine that you would need to create a chart of account --either under the account type for Expense or Cost of Goods Sold. It would depend on how you will be tracking that expense.

 

I am not that familiar with Affiliate Payments but Deb mentioned "commissions" and when I worked with a Commercial Real Estate Compapny they had their commissions for realtors set up under Cost of Goods Sold. When I worked with a roofing contractor all their subs were paid using the Cost of Golds Sold as opposed to the Expense type. But it was done that way on the advice of their accountant.

 

If you have an accountant,I would just ask them if you need to set it up as an Expense item or as a Cost of Goods Sold item.

 

Sincerely,

Linda

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Jodie

 

If you have not already done so, do not forgot to set your 1099 preferences. Then when you set up your affiliate (as a vender), there will be a box indicating whether they are eligible for 1099. If you check this box, then the affiliates that were checked as eligible for 1099s will show up on your 1099 report at the end of the year.

 

I hope this helps.

 

Sincerely,

Linda

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Yes how do I apply the payment (or to what account) so I can generate reports at year end to help me create my 1099's for my affiliates. I can do this in a spreadsheet but i really want to keep everything in Quickbooks if I can.

 

Jodie: I think you've gotten your answer in piecemeal fashion throughout all these comments, but to summarize:

 

1. Make sure you have an Expense-type account entitled "Commissions & Fees" or some such name. (Company > Chart of Accounts. Select Account > New if you need to create a new account)

 

2. Make sure you have 1099 tracking turned on. (Edit > Preferences. Select Tax:1099 on the left, then Company Preferences. Select "Yes" for the "Do you file 1099-MISC forms?" question. Highlight Box 7: Nonemployee Compensation. Under the Account column, select your "Commissions & Fees" account. Note that you can also select multiple accounts for this box if you choose to also track other vendors, such as your lawyer or accountant under "Professional Fees," for instance.)

 

3. Make sure each of your affiliates have 1099 tracking turned on. (Vendors > Vendor Center. Highlight the Vendor and select Edit Vendor. Under Additional Info, check the "Vendor eligible for 1099" box and enter their Tax ID number. Click "OK" to close.)

 

4. At year-end, run the 1099 Summary report to see if you have to send any affiliates a 1099. (Vendors > Print 1099s/1096. Select #3, Run Report. Note the dates of the report, in case you run the report before December 31st.)

 

Good luck!

Deb

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Thank you all for your help and a special thanks to Deb for putting all together so concisely. This was exactly what I was trying to figure out.

 

Jodie "Your faith in yourself is all you will ever have. Don't let anyone take it away from you ever." Burdette

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