State registration shall exercise the rights holder. Also, he is obliged to send the user the necessary documentation and information to assist him in learning to control the quality of goods and services produced by the user.
All this is provided for the franchisee fee. It can go in a lump sum fee, royalty, premium on the wholesale price of the product or in another form. How to earn franchisor? Remuneration, which receives a franchisor, is the income from the sale in accordance with Art. 249 Tax Code.
The reward can be spelled out in the contract is not necessarily in the form of fixed payments or a percentage of sales of the franchise. Also, it can go in the form of surcharge on the wholesale price of the product. Suppose the franchisor to buy convenience foods, of which makes the products. These semi-finished products it needs to sell to the user at a price that is higher than the purchase price. This fee is considered as the amount that the user has paid for the products received by him, and which is included in income from sales.
The moment of recognition of income and, consequently, the time to pay income tax, is related to the method of recognition of income and expenditure chose franchiser. With this method, as the accrual of income should be recognized in the same period, where they occurred, not whether they actually received.
In cash basis revenue is recognized in the period when he went to the cashier or to the account. In practice, this method is used infrequently. Since an average quarterly sales revenue for the last four quarters should not be more than 1 million dollar.
How to determine the costs franchisor?
There is also a franchisor costs. To ensure that the costs were recognized as expenses must be fulfilled certain conditions. They must be:
1) reasonable, that is justified from an economic point of view;
2) be documented, be prepared in accordance with applicable law;
3) made for the implementation of activities related to the receipt of income.
It turns out that if the costs do not meet these requirements, and then reduce the income before tax on their sum will be impossible. Please complete your interest by reading part 1 of this article.
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