Understanding Your Financial Reports
To assist in your financial record keeping, Fullscript has created reports to assist in calculating gross sales, cost of sales, and net income. These downloads are available from the Reports section in your Fullscript account.
Inside the Reports, you will see three views of your sales and payout activity:
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.
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)
- sales_total - represents the retail total and is calculated as the msrp_total total less 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 are reported in box 1a of your 1099-K.
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.
Reporting Your Income (US Business)
Why did I received a 1099-K?
If your sales 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 gross proceeds on a 1099-K.
Is your Fullscript 1099-K reporting a number higher than what you actually earned?
Don’t worry, this is normal, and the IRS instructions for this form actually require Fullscript to report the gross amount of payments that we facilitated on your account as opposed to the net earnings. That gross number includes what you earned AND Fullscript’s fees. You will not have to pay taxes on Fullscript’s fees. You will report the gross amount from the 1099-K on the Schedule C, but deduct Fullscript’s fees as a business expense. No sweat, you will only pay taxes on what you actually earned, and you can identify your cost of sales as a business expense using the example above.
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 you 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.