at what point am i supposed to claim my royalties from pod site on tax forms?
by hed, Window Shopper
- Created: January 1, 2014, 9:45 pm
- Updated: January 1, 2014, 9:46 pm
I am an Artist/Designer who leases the non exclusive rights to a Print on Demand Company. who gives me a percentage of every sale as a royalties and also referral fees if I gain them a sale. I am also set up as a sole prop because I intended to add some other services to my business once I had got my presence established somewhat with potential customers/fans. Though it hasn't been a full year (I started in end of may 2013) and I have yet to make very much. Its already time to renew my business tax certificate. my problem is because its only been a few months, I haven't succeeded in selling much of my art through the pod site. And the way they pay my royalties has me confused as to when I report my "earnings" on tax forms etc. the way it works is each time there is a sale, of a product with my work on it or a referral fee would be due to me for a sale. It goes to pending in my account summery on their website. it stays pending for 30 days the product is shipped in case of returns and then turns to cleared in my pod account. so technically speaking once cleared it belongs to me.. I can either spend it back on their website or let it build up to the minimum required amount for them to pay me either through paypal ($50) or a check ($100). to be payed before reaching one of the minimums would cost me $5. this is where my confusion lies. like I said its been 7 months since I started and I haven't made very much. not enough to be paid by paypal, in fact not even enough to warrant the $5 fee to be paid early. but i have made some sales non the less. I just don't understand I claim these cleared earnings when they clear because thats when the company says its mine even though they still have physical possession of the funds or when they transfer it to me and I have physical possession of the funds. I had been guessing it was when they payed me my cleared funds otherwise I wouldn't have the money to pay taxes and thats how it works with wages. So as I haven't been payed through paypal or had a check yet I haven't reported any of the handful of sales I have made so far. But after checking with other sellers on this pod site it seems a few report royalties as the sale is made not when it is payed to them....others do it the way i was thinking it would be. So now I don't know if I made $0 last year or $16.00?
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