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JLES

Commision sales vs. Re- sell products

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I have a LLC company and operate as an engineering consultant.

Up to now I was the go between 2 companies in regards to product and sell a product. I put both together and if needed did the requiert engineering work and the after the sale of products was completed, my company would receive the predetermined commision.

Now several of the producers of goods have asked me to become the direct customer to them, add my markup the the quote and then sell it to the end user. 

I have no experience doing this, Questions I have are 2 fold.

Liability for the products sold by my company, but not produced.

Tax issues regarding sales tax and federal taxes.

I am a sole operator of my business.

Should I agree to the change in the selling process or do I have to abandon this area of my business. 

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This really not the best place to ask whether one business relationship or another is "the best".  Invest a few bucks and confer with a business oriented attorney.  Regarding the taxes - you need to pay them.  Is that what you meant to ask?

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1 hour ago, JLES said:

Liability for the products sold by my company, but not produced.

 

As a reseller your exposure is limited but that doesn't prevent you from being named in a lawsuit if a product defect causes injury or damage. Your business insurance should include products liability coverage.

 

In fact, even your current way of doing business can result in you being sued so I hope you already engineer's professional liability coverage and products liability coverage.

 

1 hour ago, JLES said:

Tax issues regarding sales tax and federal taxes.

 

If you are already using Schedule C and Schedule SE it shouldn't be too much trouble to add the resale business on to them unless you want to create a separate DBA for the resale business. Then you can use separate schedules for the resale business but you combine the results on your 1040. The IRS website has plenty of publications that can help you.

 

You will, of course, have to collect sales tax and, in turn, pay that to the taxing authorities. Your state and local taxing authorities should have all that information on their websites.

 

1 hour ago, JLES said:

Should I agree to the change in the selling process or do I have to abandon this area of my business. 

 

That's entirely up to you to figure out by doing a cost vs profit analysis.

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