How to Calculate Sales Tax when taking a commission
I have a website that sells products from local retailers. We charge a 5% commission on sales.
Can anyone with experience in this area comment on the proper way to charge sales tax on this kind of transaction.
Assuming a product that costs $10, and let's assume a 10% sales tax, the government is therefore owed $1.
Is the proper way to do this: Scenario A: Charge the customer $11 Give $10.45 to the retailer We take $.55
or... Scenario B: Charge the Customer $11 Give $10.50 to the retailer We take $.50
In Scenario A, presumably we owe the government $.05, which is the portion of the sales tax we have allocated to our cut. In Scenario B, we give the entire taxable amount to the retailer, and assume they will pay the tax.
I presume that either may be acceptable, however my hunch is that one is preferable over the other from a headache perspective. There may also be some rules regarding commissions and taxes that I'm not aware of. Anyway, if anyone has experience with this, would really appreciate feedback on how to do this properly.
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