Commission trade is a fairly common type of entrepreneurial activity. It has a number of advantages, but there are important nuances. We will talk about this in the article. Also we will understand what is the principal, the principal, what is the difference between them.
What is commission trade?
You can trade in different ways. You can produce goods, and then sell them to the end user. You can act as an intermediary, that is, to purchase goods from a supplier, and then resell them to a retail buyer. And you can sell something that does not belong to you.
The essence of commission trading is that a certain company performs operations on its own behalf, but at the expense of the counterparty. It is important that the ownership of the goods to the seller does not pass. There are such concepts as an agent, a committent, a commission agent, a principal. The sales company names itself as a commission agent, and the company that transfers the goods for sale is a commissioner.
For their services, the commission agent receives a commission fee in the form of a percentage or amount established by the contract. The costs associated with the execution of the commission are compensated by the committent. All these nuances are reflected in a special way in accounting, specific accounts and postings are used, the primary documents are also drawn up differently than with traditional trade.
Commission agreement and agency agreement
The essence of the contract is that one party for the award concludes transactions with third parties in its own name, but acts in the interests of the other party. For the work done, he receives an agreed remuneration.
Such a treaty refers to intermediary. That is, the commission agent (agent) enters into an agreement with the principal (principal) for the sale of goods. They sing out an agency contract and a commission agreement. What is the difference between them?
In the commission agreement, the commission agent acts on his own behalf. In the contract of commission, the attorney acts not on his own behalf, but on the person of the principal.
The difference from the agency contract is that the agent performs both legal and actual actions, and the commission agent - only legal.
What does "committent", "principal" mean?
So, within the framework of intermediary contracts, the party initiating contractual relations is called. The concept, like, one, but the names are different. Does this mean that the concepts are identical? The principal, who is this?
A person is a person who acts with the commission to perform any actions for a reward. The principal is the person who authorizes the second person to act as an agent. The concepts are close. Agent and principal appear in the agency contract. The commissioner and the commission agent are in the commission agreement. Therefore, the principal (the principal) - who is this? This person, who acts as the initiator of relations, entrusting to perform certain tasks for remuneration.
Can you say that the principal and the principal are the same? Despite the fact that the concepts are close in meaning, we can not say that they are identical. They appear in different treaties. This means that there is a difference between the concepts of "principal" and "committent".
The Principal may instruct the agent to act both on his own behalf and on behalf of the principal. The commissioner may instruct the commission agent to act only on his own behalf. You can say that the principal and the principal are the same, only under certain conditions. In general, the second concept is somewhat broader.
What does "agent", "commission agent" mean?
Let's look at the second side of the contractual relationship. The agent can act both on his own behalf, then the contract will be similar to the model of the commission agreement, and the concepts of agent and commission agent will become identical, and on behalf of the principal, then the concepts of agent and commission agent can not be identical. We can say that the concept of "agent" is broader than the concept of "commission agent" and includes it in itself. Now it should be clearer what a committent (principal) is, and what is a commission agent (agent).
The advantages of commission trade
The first tangible plus is that the commissioned goods do not need to be paid. It is given for sale and is in a responsible custody. The transfer of revenue for the goods sold is only at the time when this revenue really came.
Due to this advantage it is easier to start a new business, you do not need large sums for the initial investment. After all, what is a principal (principal)? This person providing their goods for trade.
The next advantage is the ease of processing returns. If it is found that the defective product has expired or it has "not gone" for some reason, it simply returns, because it belongs not to you, but to the principal. In classical trade, the return of goods creates many difficulties, from documenting to taxation. Within the framework of the commission agreement, it is possible to conclude sub-commission contracts.
Also, considerable advantages are that accounting and taxation for an intermediary is much easier than for someone who sells his own product.
Commission trade provides two options. A commission agent may take part in payments for goods between the principal and the buyer, or may not take them.
If a scheme is chosen without the participation of the commission agent in the calculations, then the payment from the final buyer goes directly to the settlement account of the principal, bypassing the intermediary. The commission agent only gets his reward on the basis of the work.
The scheme with participation in the calculations implies that buyers are calculated for the goods with the commission agent, and then the accumulated amounts are transferred to the account of the committent. In this case, the commission agent has the opportunity to independently retain the amount of his remuneration, as well as to compensate for the costs incurred during the execution of the assignment.
To keep records under the condition of commission trade is simpler. All incoming goods are reflected on the off-balance account 004. All movements for the goods are also reflected in the off-balance account.
In accounting, only the amount of commission is reflected, they are included in the income of the commission agent. For their reflection, account 62 is used in correspondence with a score of 90. If the firm is a VAT payer, then it must also be allocated. The structure of costs includes those costs that the enterprise incurred in the course of execution of the assignment.
If the commission agent does not participate in the calculations, its accounting is even simpler. If involved, the amounts received and transferred must be displayed using account 76.
If the enterprise is trading not only commission, but also own goods, the accounting for these operations should be kept separately.
Documents on the sale of goods to buyers, the commissioner writes out on his behalf. The commission agent has the right to use any taxation system, both classical and simplified.
The goods are transferred under the act of acceptance-transfer of goods. Information about the goods sold is transmitted in the form of a commissioner's report. An act of rendering services must be issued for the remuneration and an invoice is issued.
In other respects, the commission agent uses standard, unified forms of primary documents.
The commission agent may charge commission from the amount that was received to him for the goods sold. There is another option. The commissioner himself transfers the commission fee within the terms established by the contract. Taxes are paid only with the amount of commission.
The commissioner's report
The commission agent is obliged to regularly provide a report to the principal (principal) about the goods sold. The timing of the report is not legally fixed, but they are prescribed in the contract. If the volumes of goods are large, it is convenient to report monthly, in addition, the issuer is interested in monthly reports in order to timely and correctly calculate VAT. If the principal is not a VAT payer, then any period for reporting can be set.
The report form can be developed independently or used already ready, for example, from the Internet.
At first glance, mediation contracts may seem a bit confusing. Many actors: the agent, the committent, the principal, the commission agent, the buyers. But if you understand, it turns out that working under a mediation agreement is much easier and more convenient, keeping records more easily, and there are many more advantages than disadvantages. This explains the popularity of this type of entrepreneurial activity. Now you have figured out what a committent, principal, and do not confuse these concepts with each other.