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  • Jan 31, 2015, 09:09 AM
    What expense account for a business buying a competitor?
    When one business buys another (in our case, a travel agency franchise, we are buying out another franchise owner), what "expense" (or otherwise) account does this go under? We are paying directly out of our business accounts. (I guess when I replace that money with personal funds, that'll be back to Owner's Investment)?

    In our case, we aren't actually paying the other franchise owner anything, instead, we are paying the main franchise company a "transfer fee", basically.

    With both our franchise agreements, you forfeit your outstanding commissions when you sell or discontinue. Our agreement with the other owner is to pay them 85% of their outstanding commissions when they come in. So they aren't at a total loss for the work they've done, just to get out of the business.

    I assume we'll need to 1099 the other owner for all payments on those commissions.

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