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I run an exercise studio and provide advertising, space, and collect payments for the instructors. Gross revenue is reported by the studio, so credit card numbers reflect correctly, but is the money given to the instructors an income adjustment (instructor automatically gets a percentage of the revenues) or is it considered some type of expense?


The BIDaWIZ Team's Answer:

Based on your description, the instructors would be classified as independent contractors for tax purposes. For bookkeeping purposes, the payments to the contractors would be considered a cost of service and a reduction to the gross sales.

The BIDaWIZ Team



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