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Need Advice for JV Tax

Discussion in 'Business & Tax Advice' started by dwpg002, Nov 2, 2010.

  1. dwpg002

    dwpg002 Senior Member

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    Hi,

    I am doing JV on profit sharing 70% and 30%. My JV partner is worrying about US tax Issue. Is it possible for him to provide the expenses has serve maintains for the 70% share and pay tax only for 30%. Any only please advice how he can make is tax declaration
     
  2. Markbh

    Markbh Regular Member

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    This sounds like a computer translation and is quite confusing. What is your native tongue?

    Can you clarify who holds 70%? I get it's you... And the American side has 30%?
    Is the full 100% paid through his account? Private? Company? LLC - Partnership?
     
  3. dwpg002

    dwpg002 Senior Member

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    Yes he holds 30% from his eBay EPN account. And i get 70% paid from him. He pay my 70% direct to my bank account.
     
  4. Delboy2424

    Delboy2424 Regular Member

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    simple - his 70% is a payment to you for services rendered, his 30% will be taxable.
     
  5. Mjordan

    Mjordan Power Member

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    I'm in about the same boat with a JV I'm doing. So you say that only the portion that we keep will be taxable? How does that work?
     
  6. fun4uoc

    fun4uoc Jr. VIP Jr. VIP Premium Member

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    Yes, only the portion he keeps will be taxable, the payment going out is an expense, most likely an advertising expense.
     
  7. Mjordan

    Mjordan Power Member

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    Oh wow that makes me feel so much better now lol. So I'm getting all the money, and just wiring my guy his share. Which means all of the taxes are filed under me. How am I supposed to let the government know that I'm only keeping a portion?
     
  8. Delboy2424

    Delboy2424 Regular Member

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    Just give him a "services" invoice for his share for which you take the monies as services paid for direct to you ...easy peasy....dont over complicate it;)
     
  9. pyronaut

    pyronaut Executive VIP

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    You just need to look as it, as if this isn't a JV, and he is providing services. So if you were buying traffic from him etc. Then you would not pay tax on that would you? It is an expense.

    When you declare tax (Atleast over here), you simply write up what all your expenses were, and you only pay tax on what you earned.

    Even in signed partnerships (Registered as a partnership with the tax department), each party only pays what they earned from the partnership. So for example I run a small hosting co, All the money goes into a central bank account. Of which is the business bank account. We then pay all expenses from there, and any VAT/GST/Sales tax if required from there. Any profit is then split and paid out, and then it is up to the individuals to declare that tax. The business does not pay the tax for the individuals in a partnership.
     
  10. Mjordan

    Mjordan Power Member

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    Ok wow glad you asked this dwpg002, and it's being cleared up. All makes sense now.

    Ok so how exactly do I go about sending him a "services" invoice?
     
  11. dwpg002

    dwpg002 Senior Member

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    .

    Same question I want to know. Can I sent just mail proof as service, for maintenance of web hosting and web promotion work.
     
  12. bosanci28

    bosanci28 Newbie

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    same question here,thanks!
     
  13. BorisTipsIt

    BorisTipsIt Regular Member

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    Just look up a free invoice template, download, list your services and send it. You just want a record in case any tax authorities take a look.
     
  14. jdmeg6

    jdmeg6 Junior Member

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    hey there im in a JV as well, my jv partner is paying me 50% of the earnings we make, so actually he is buying traffic and advertising services from me. at the end of each month he would send over the 50% payment for advertising and traffic services,

    Now am I suppose to give me him a invoice so that he can write off the traffic service expense? or does he give me an invoice?
     
  15. dwpg002

    dwpg002 Senior Member

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  16. BinaryBlues

    BinaryBlues Registered Member

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    As I understand it, this is similar to how affiliate networks work. Think about it - say they are paid $1,000 by a merchant for traffic their publishers sent. They now have to pay their publishers, say 90%. They aren't going to be taxed on the full $1,000 the merchant sent them (otherwise it wouldn't be a viable business, obviously).
     
  17. Delboy2424

    Delboy2424 Regular Member

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    Think this is being way over complicated:

    For anything where you need to handover money, consider this firstly as a cost to you:

    100% to you - means you pay 100% applicable tax BUT:

    Partner takes 50% cut - means YOUR net income is 50% (this is the final amount you get taxed on).

    What does the invoice need to be:?

    Address to partner

    Date


    DESCRIPTION - SERVICES INVOICE:

    Invoice for services rendered during month of "x" per agreement.


    November 2011 fees: Monthly Fee = "x"


    Total - "x"

    Tax - "x" (if registered for VAT or similar)
    Grand Total "x"

    Your business name/address in the footer template


    That is how you template should look, providing it ties back to the monies you pass over you shouldnt have any issues.
     
  18. iamman

    iamman Junior Member

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    Receipts, cancelled checks, bank statements. Make sure each expense(payment to him) can be tracked in all three ways and you're fine. Keep your records in case you're ever audited.
     
  19. jdmeg6

    jdmeg6 Junior Member

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    sorry i still dont understand who is suppose to give out the invoice? is it me or my partner? my partner receives monies from affiliate company. and he pays 50% for advertising cost, am i suppose to give him invoice or does he give me an invoice?
     
  20. fun4uoc

    fun4uoc Jr. VIP Jr. VIP Premium Member

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    Guys, everyone is really over-complicating this. It's not that difficult, if the partner gets paid from the affiliate company and pays you out, then he is the one that would need to submit an invoice to you. At that point it is YOUR responsibility to pay any taxes on the amount you received.
     
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