I have a small ticketing business. Makes it easy for some local people to sell tickets to small events. this is really not income as 95% of the money I take in I give out to the clients with a small "Service fee removal"

How do I report this on my taxes? I'm a sole proprietor right now.

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    You need to consult a professional on this. There are way too many factors for someone on the internet to give you a reasonable answer. – TheSaint321 Apr 25 '17 at 19:18
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    "this is really not income as 95%..." what about the other 5%? Seems like that's profit that should be declared on your taxes. – D Stanley Apr 25 '17 at 19:18
  • yeah sorry I mis worded the post. I was wondering if I just don't have to report the 95% as it is pass-through and not income as opposed to the 5% which is income. I know I need to report the 5%. – BostonMacOSX Apr 25 '17 at 19:19
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    Here's a basic rundown of what you can deduct as business expenses. irs.gov/businesses/small-businesses-self-employed/… Legally, the 95% you pay out to the original ticket owners would be tax deductible; BUT I would keep the most pristine records of every transaction and payment ever to avoid problems down the road. – Keith Apr 25 '17 at 19:25

You're charging service fees as a conduit entity for these tickets. While the service fee is not a fixed rate, but a percentage, you would need to record each purchase at dollar amount.

To illustrate, it would look like: enter image description here

Now, to your question:

How do I report this on my taxes?

You would first start out by filing your Schedule C from the eyes of the business (the money you earn at your job, and the money you earn as a business are different). Just keep a general journal with the above entry for each sale and close them down to a simple balance sheet and income statement and you should be fine. Of course, read the instructions for your Schedule C before you begin.

As always, good luck.

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    The schedule C form has one place for gross receipts and one place for the cost of goods sold. – David Schwartz Apr 25 '17 at 21:32

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