I have a sole proprietorship. I want to promote and sell a product where I will give 10% of sales to a non-profit charity. Do I need a special tax status to do that, or can I do it as a sole proprietorship? How do I enter it into Quickbooks? When businesses donate a percentage of sales to a non-profit, is the percentage based on gross or net proceeds?

ANSWER

The BIDaWIZ Team's Answer:

You do not need a special tax status to donate to charity. You could change to a 501(c)(3) organization, but that would mean you are a non-profit. This doesn't appear to be the case. In your case, the amount of sales contributed to charity isn't a deductible business expense since you're organized as a sole proprietorship. Rather, you would deduct the contribution via Schedule A of your form 1040. It would be based on the net proceeds as it's an individual donation.