Partnerships (Co-Owned Inventory)

A partnership marks an inventory item as co-owned. When the item sells, the gross profit is split between you and your partners based on the percentages you set up. JewelTrak tracks the obligation, calculates the suggested payout per partner, and records each payment.

Partnerships work on jewelry, watches, and stones (anywhere you have an inventory item with a cost basis).

Setting up a partnership on an item

On any item — jewelry, watches, diamonds, colored stones or pearls — tick Partnership on the General tab. It sits in the Purchase card, just under Invoice #. Then click the pencil beside it to set the value, partners and splits.

1. Actual Cost is shown for you, not typed. It is the item’s Total Cost — the purchase price plus every additional cost on the item — so it stays current on its own as costs are added. To change it, change the item’s costs. It only affects your own profit; a partner’s share is never figured from it.
2. Set Partnership Value — the valuation the partner’s percentage is figured from. It starts at Actual Cost, which is where it stays for most items. Raise it when you bought unusually well and want the partner working from a higher basis; the difference stays with you. It cannot be saved below Actual Cost, because that would pay a partner a share of money the sale never made.
3. Add Partners with their splits:
   • Profit Only — tick it for a partner who takes a slice of the profit but owns none of the piece and put in no cost (a finder’s fee, a commission). Every other field is hidden and you enter just their Profit Only %, which comes off the top of the profit.
   • Ownership % — the partner’s share of the piece. Typing it fills in Cost Amount (Ownership % × Partnership Value), and typing a Cost Amount fills in the Ownership % the same way.
   • Share of Profit % — shown for you, not typed. It is what the partner actually gets of the profit: whatever the profit-only partners leave, times their Ownership %. With a 10% profit-only partner, a 50% owner’s share is 45%.
   • Cost Paid — what the partner has put in so far. Cost Balance shows what they still owe (Cost Amount minus Cost Paid).
4. Save. The item now shows a P badge in inventory lists and on invoices.

You can have multiple partners on the same item — splits stack as long as the math works out.

Unticking Partnership removes the partners and splits when you save. Once a partner payout or a reconciliation is recorded on the piece, the box stays ticked and greyed out, with the reason under it, because removing the partnership would lose the record of who was paid. Reverse that settlement first if it was wrong.

When YOU sell the item to the end customer (default flow)

Selling a partnership item works like any other invoice line — pick it, set the price, finalize. Behind the scenes the system records that this item was sold from a partnership and that a reconciliation is owed.

The item appears on the Partnerships page under the Open filter (sold, not yet reconciled). Each row shows the sale price, your cost, the calculated gross profit, and the suggested payout per partner.

The Partnerships page has four filters:

• Open: sold and waiting to be reconciled.
• In stock: partnership pieces that haven’t sold yet. This is where you settle a piece a partner sold (see below).
• Closed: reconciled, or ended without a sale.
• All: Open and Closed together.

Reconciling (paying partners)

When you’re ready to pay a partner:

1. Go to Partnerships, expand the item.
2. Review the suggested payout amounts. Each partner’s card shows the payout in its parts: Capital paid (the cost they put in, returned to them) + Profit share (their Share of Profit % of the profit) = Suggested. A profit-only partner has no capital, so their suggested payout is the profit share alone. When the Partnership Value is above cost, the Partnership profit line under Sale & Cost shows the profit those shares are figured from.
3. For each partner, fill in Payment Date, Payment Method, Check/Card Number (if applicable), and any notes.
4. Click Reconcile.

Once reconciled, the item moves to the Paid status and stops showing on the open list. The reconciliation creates a permanent record (the partnership snapshot) showing the actual costs, the GP at the time, and the per-partner payouts.

Adjusting a suggested payout (with reason)

The reconcile drawer pre-fills each partner’s payout from the formula (cost recovery + their share of the gross profit), but you can edit the amount before saving:

1. Click the suggested amount on a partner’s row and type the actual amount you’re paying.
2. If you change the suggestion, a Reason field appears and is required. Briefly note why (e.g., “$250 trade discount applied per agreement”, “partner forfeit due to late delivery”, “rounding”). Saving without a reason is blocked.
3. The tenant’s share auto-balances: if you reduce a partner’s payout by $X, the tenant keeps that $X. The reconciliation snapshot records both the formula-suggested TotalOwnerProfitValue and the actual TotalOwnerProfitActual so the audit trail captures the original intent and the realized outcome.
4. The AdjustmentReason is stored on the per-partner reconciliation detail row alongside the adjusted Payout — viewable later from the reconciled-partnerships report.

This keeps the formula honest (you can’t quietly underpay a partner without a paper trail) while leaving room for the real-world negotiations that come up case by case.

Sending a piece to your partner on memo

When a partner needs the piece (they have a buyer, or want to show it), put it on a memo to that partner, the same way you memo anything else. A partnership piece is an ordinary memo line:

• It is priced like every memo line, at Price 1 unless you change it. The memo shows the piece’s full value, so nobody has to call and ask which number it is.
• It can share a memo with your own goods. There’s no separate kind of memo to pick, and nothing to sort out before you start.
• It is marked ◆ on the memo page and on the printed memo when the piece is co-owned with that memo’s customer. The printed memo keeps your normal consignment terms and adds one line: “Items marked ◆ are jointly owned with you. If you sell one, you will be invoiced for our share rather than the memo price.” A memo with no ◆ piece prints exactly as it always has.
• The Partnership panel shows who has it and links to the memo. If the partner sells it, that partner is already chosen when you settle.

A partnership piece on memo to anyone who is not one of its partners gets no ◆. It’s ordinary goods on that memo. If that customer buys it, it’s a normal sale at the memo price, and you settle with your partner afterwards the usual way.

The ◆ sentence can be changed under Settings → Organization → Partnership line note. Use {store_name} and {partner_name} where those should appear, and type ◆ where the mark should print. Clear the field to go back to the built-in wording.

Invoicing a memo that has ◆ pieces

Select the items and click Invoice, as with any memo. The dialog handles each line by what it is:

• ◆ pieces are billed to the partner for your share. For each one there’s an optional partner sold it for box. Enter what they sold it for and the dialog shows the bill (that amount × your %). Leave it blank and the line opens at $0 so you can fill it in on the invoice. Each ◆ piece gets its own settlement invoice, with no tax, exactly like Settle on the item (see the next section).
• Everything else goes on one invoice at the memo price, as always.

If that makes more than one invoice, the dialog lists them all with links. If there’s only one, it opens straight away.

If you bill the memo to a different customer, no line is treated as ◆. That customer is buying the goods, so every line is a normal sale at the memo price.

When the OTHER PARTNER sells the item

Some partnerships are set up where the OTHER partner takes possession of the item and sells it to their end customer. The partner then remits your share back to you. From your books’ perspective, you never sold to the end customer — you sold your interest in the item to the partner.

To make this clean and IRS-auditable:

1. Open the piece’s settlement drawer. Either go to Partnerships, choose the In stock filter and click the piece, or click Settle on the item’s Partnership panel. The drawer needs permission to see costs: without it, the Partnerships rows don’t open it and the panel has no Settle.
2. Under Who sold it?, choose the partner. If the piece is on memo to a partner, that partner is already chosen. If the piece can’t be settled to the partner you chose (for example it’s on memo to a different partner, or out on memo to someone who isn’t a partner), the drawer says why as soon as you choose them, before asking for a price, and Create Settlement Invoice stays greyed out. Return the memo first, or choose the partner who has it.
3. Enter Their selling price (what the partner sold it for) if you know it.
4. Click Create Settlement Invoice (it needs permission to see costs; without it, the drawer says to ask a manager). The piece comes off the partner’s memo (or out of stock, if there was no memo) and a draft invoice opens with:
   • Customer = the selling partner (a wholesale-to-partner invoice)
   • Line Cost = your share of the partnership cost basis (PartnershipValue × your owner % / 100)
   • Line Price = your share of their selling price (your capital back plus your % of the profit, which comes to their price × your %). It’s $0 if you left the price blank; enter it on the invoice.
   • Taxable = unchecked (the partner is the merchant of record and owes the sales tax to their customer)
5. Save the invoice and capture the partner’s payment normally (cash, check, ACH).

A piece that’s on memo to that partner can also be settled straight from the memo: select it and click Invoice (see Invoicing a memo that has ◆ pieces above). It makes the same settlement invoice.

If you choose We did under Who sold it?, nothing is created: sell the piece on a normal invoice, and it moves to the Open filter for reconciling.

The moment the invoice is paid in full, the partnership auto-reconciles — no separate Reconcile click needed. A reconciliation snapshot is recorded with SettlementType = 'PartnerSold' (vs the default 'OwnerSold' for the flow above), and per-partner Payout rows mark each partner’s capital recovery with PaymentMethod = 'PartnerSoldSettlement' + Notes “no cash from tenant; capital recovered via partner’s own sale.”

What this records for an IRS audit

Audit question	Where it’s documented
What was the item’s total cost?	reconciledpartnerships.ActualCost
Who funded each share?	reconciledpartnershipdetails.CostPaidAmount per partner
Who sold it?	reconciledpartnerships.SellingPartner + SettlementType = 'PartnerSold'
What did you receive?	The settlement invoice — line price + payment record
What was your basis?	reconciledpartnerships.PrimaryCostValue
What was your gain?	line price − line cost (also stored as TotalOwnerProfitValue)
Did you pay partners cash?	No — captured by PaymentMethod = 'PartnerSoldSettlement' and the explanatory Notes
Where did the rest of the inventory dollars go?	Partner-equity cleared via the per-partner Payout rows (capital recovered via partner’s own sale)

The reconstructed journal entries: cash +$10K, AR cleared, inventory −$10K total ($5K via COGS for your share + $5K cleared against partner-equity), revenue $10K, profit $5K. Every dollar accounted for.

Sales tax

You don’t charge sales tax on the settlement invoice (Taxable is forced off). The partner is the merchant of record for the end-customer sale and owes the tax in their jurisdiction.

Cancellation

If the deal falls through (partner returns the item, end customer rescinds, etc.), void or delete the settlement invoice the same way you’d void any invoice. The reconciliation reverses and the partnership goes back to active status. A piece that came off a partner memo goes back on that memo, so return it from the memo when the partner hands it back.

Trade-in negotiation and partner protection

If the sold partnership item’s price was inflated to fund a trade-in over-credit (a common negotiation tactic — see Trade-In Negotiation), the Trade Concession on the line backs out the inflation before the partner’s split is calculated. The partner gets paid on the realized sale price, not the puffed-up negotiation number. Without that, you’d take a loss out of pocket on every partnered trade.

How the profit reports treat partnerships

Gross Profit, Pricing Realization and Top Sellers all show full invoice figures by default, so their totals agree with the dashboard and the sales tax report. A P badge marks partnership rows.

• You sold to the customer: the row shows the whole sale. A $10K item sold for $20K reads $20K · $10K · $10K profit.
• Partner sold (settlement invoice): the invoice itself is your share. Its line cost is your basis (PartnershipValue × your owner % / 100), so a 50/50 of that $10K item reads $10K · $5K · $5K profit.

To see only your share of the sales you made, tick Show partnership sales at our share on any of the three reports. Every money column on a partnership row switches together, so the $20K sale above reads $10K · $5K · $5K, the same as if the partner had sold it. Settlement invoices don’t change, since they already are your share. With the box ticked, the report’s heading says Partnership sales shown at our share, including on printouts and exports.

Tips

• A partnership only pays out once — after reconciliation, the obligation is closed. If you returned the item and re-sold it, that’s a new partnership cycle (you’d need to reset the partnership status).
• “Profit Only” partners (no cost claim) are useful for finders’ fees or commissions — they take a slice of the profit but never recover cost.
• The sign convention for the reconciliation suggestion math: profit pool = sale price − (trade concession) − cost. Partners take their % of that. The amounts you actually pay are editable per partner — the suggestion is just a starting point.

The Sold Partnership Items report

The Sold Partnership Items report (reached from the Dashboard, exportable) lists every co-owned item that has sold — Stock #, Type, Description, the invoice it sold on (number + date), Quantity, Ct Wt, Cost, Sell Price, Gross Profit, Pending Payouts, and the partner names. Filter by partner. It’s your settle-up worklist: the Pending Payouts column is what you still owe partners on items already sold, so work it down to zero as you reconcile each one on the Partnerships page.

Cost, Gross Profit and Pending Payouts only appear for staff who can view cost. A payout is a share of the profit, so it would reveal cost. Without that permission these columns are left off the Dashboard tab, this report and its download, and the Partnerships list.