Save Rs 499. Go Ad-Free with CAclubindia Pro for 2 Full Years. Subscribe Now!

Accounting at an ad agency

Others 230 views 1 replies

Yogesh Chandra

Business

50 Points Posted on 29 January 2021

I am starting a new digital marketing agency which will get money from clients for taking out online ads in their name.

The money clients pay us for taking out ads is separate from what we bill them for our service charges. Obviously, the ad spend amount cannot be counted as our revenue. Our service charges are our revenue.

How should we account for the ad spend money received?

Though this question is in the accounts category, Any additional information about how to handle the tax/filing aspect will also be much appreciated.

Replies (1)

yasaswi gomes

My grammar is 💯 good I

7301 Points Posted on 03 February 2021

I’m not sure about taxation for services, probability every revenue is taxed...

next you can show the ad money as revenue because you know transaction price is charged through ‘ cost plus and a margin method’ so everything is a revenue, don’t be surprised because when start a company, you will incur operating expenses and they are covered through ad spent + service charge. You can disclose this information in the revenue schedule in the statements.