To assist in your financial record keeping, Fullscript has created reports to aid in calculating gross sales, cost of sales, and net income. These downloads are available from the Reports section in your Fullscript account.

If you are signed in to Fullscript, here is a direct link: US | Canada

Inside the Reports, you will see three views of your sales and payout activity:

Screenshot of Fullscript Financial Reports

How to identify Gross Sales, Cost of Sales, and Net Income

Within your Reports, reference the Account Activity and Balance Report.

In our example we wish to review financial activity for 2016. By selecting the year in question and clicking Download CSV, a file is created that outlines all the order activity.

Sample CSV Export of Account Activity and Balance Report

The following columns are included:

transaction_number – represents the shipment ID
transaction_type – payout, refund or shipment (order)
transaction_status – paid (for payouts), shipped (for shipment) or received (for refund)
order_number
transaction_date
msrp_total
sales_total – represents the retail total and is calculated as the msrp_total total less patient_discount
patient_discount
cogs_total – the fee earned by Fullscript representing product cost and fees associate with administering the transaction
amount – represents your net earnings and is calculated as sales_total less cogs_total
balance – running balance of funds available for payout

Commonly, your accounting and tax records will need to compute Gross Sales, Cost of Sales and Net Income.

Gross Sales represents the total of the retail value of orders transacted. For this, we sum up the values in the sales_total column. In the example below, we see a total of $1,635.16. As a note, if you are a US business and your account activity was significant enough to require a 1099-K report (greater than $20,000 Gross Sales and greater than 200 transactions), the sum of annual Gross Sales should not be confused with the amount reported in box 1a of your 1099-K. This is because the 1099-K must report the total dollar amount of total reportable payment transactions for each participating payee without regard to any adjustments for fees, refunded amounts, or any other amounts such as sales tax or shipping charges. To find out more about 1099-Ks please refer to the section below called Reporting Your Income (US Business).

Cost of Sales represents the cost your practice incurred to complete the sale. For this we sum up the values in the cogs_total column. In this example we see a total of $1,519.99. As a note, if you are a US business and you received a 1099-K, you can report the Cost of Sales as a reduction to your gross sales reported on that form.

Net Income represents the total of the earnings available for distribution to your business (still to be paid out by Fullscript). For this we deduct the Cost of Sales from Gross Sales. In this example we see a total of $115.17.

Sample CSV Export of Account Activity and Balance Report

Reporting Your Income (US Business)

Why did I receive a 1099-K?
If your “Total Gross Volume” was greater than $20,000 and 200 transaction, Fullscript will mail you a 1099-K. If you are to receive this form, you will be notified via email that the 1099-K is on its way and you may also contact us to receive a PDF copy. If you did not receive a 1099-K or would like to reconcile the form to your practice records, the above example will assist in calculating your annual earnings.

Why am I receiving a 1099-K and not a 1099-Misc?
Form 1099-MISC is used to report business payments to independent contractors. This is not the case with Fullscript, and it is important that this type of relationship does not exist. A 1099-Misc contractor relationship would mean you are earning “commissions” on the sale of product, which is not the case since many practitioners are prohibited from doing so.
Fullscript is legally a third-party network payment provider, meaning we facilitate your patient’s orders by administering the transaction and organizing the delivery of products at the price you selected. So, instead of reporting that you did work for Fullscript (which would require a 1099-Misc), we report your pay as money earned via Fullscript and are required to report total gross volume on a 1099-K.

Why is my Fullscript 1099-K reporting a number higher than what I actually earned?
Don’t worry, this is normal, and the IRS instructions for this form actually require Fullscript to report the “Total gross volume” of payments that we facilitated on your account as opposed to the net earnings. That gross volume number includes the total unadjusted dollar amount of aggregate payment transactions for each Fullscript account. This includes not only the retail price of any product sold but also any sales tax or shipping charges collected during payment. Not to worry though, all sales tax and shipping charges are included in the fees charged to you by Fullscript and you will not have to pay taxes on Fullscript’s fees.

How do I report it on my tax return?
The IRS states that separate reporting of these transactions is not required. However, the Form 1099-K can be used in conjunction with your other Fullscript reports and tax records to determine your correct tax. It is recommended that you follow the return instructions on the form you are completing to report your gross receipts or sales. This may differ from your 1099-K total since the 1099-K reports the gross ‘payment’ amount on transactions; regardless of charges like sales tax and shipping, which are collected and included as part of Fullscript’s fees. You can then use the fees charged by Fullscript as your cost of sales and report them as a business expense on the appropriate line item of Schedules C, E and F. Do not fret, you will only pay taxes on what you actually earned, this amount should match the Net Income provided in both your Account Activity and Balance report, like in the example above, and in your 1099-K reconciliation report.

 

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Reporting Your Income (Canadian Business)
The business relationship between Fullscript and your account does not require us to send any statutory CRA forms. However, the above guide will assist you in calculating your annual earnings. Should you wish to receive a T4a for your records, starting in early February Fullscript will fulfill requests to create these for illustrative purposes only. Please contact [email protected] if you wish to receive a PDF copy.