tlab
12-05-2011, 01:44 PM
I'm a single-member LLC operating as an independent, marketing consultant. My clients are largely paying for my time, but occasionally there are other hard costs that I need to add to the monthly invoice. An example would be: a domain name I buy for a campaign, a freelance graphic designer who is a subvendor for a short time, or a fee for an email marketing list.
My question is, if those hard costs are reimbursed to me through a client's monthly invoice, won't that be viewed as "income" by the IRS? Is there another way I should account for expenses like that so they do not appear as income?
Many agencies and freelancers in my field will charge a "mark up" on hard costs that they pay in advance, but it seems to me that the typical mark up (17-25%) would need to be closer to 40% to cover all taxes if the IRS is viewing hard costs as income when they are reimbursed.
My question is, if those hard costs are reimbursed to me through a client's monthly invoice, won't that be viewed as "income" by the IRS? Is there another way I should account for expenses like that so they do not appear as income?
Many agencies and freelancers in my field will charge a "mark up" on hard costs that they pay in advance, but it seems to me that the typical mark up (17-25%) would need to be closer to 40% to cover all taxes if the IRS is viewing hard costs as income when they are reimbursed.