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Business with Outside Entities


Educational Business Activities (EBA) may choose to do business with External Users (i.e. entities outside University departments).  It is important to understand and consider all the issues described below.

External Surcharge

Rates for external users will need to be appropriately costed to account for the full costs of the goods/services.  The rates may include an application of a surcharge beyond the cost recovery, including overhead fees, and take into account the existing market rate for the same or similar goods or services.  The surcharge represents an additional fee in excess of the cost of the service. For example, unlike breakeven only rates applicable to internal users, external price can be “market-based” with sensitivity to the Business Community.  The surcharge may be used by the EBA to fund equipment replacement, cover administrative overhead, federally unallowed costs, and re-investment into EBA operations.

Revenues associated with external customers should be recorded in account 440500-External Sales.  Excess Surcharge must be recorded in Account 440501 – Surcharge External Sales.  Activity associated with external customers must be recorded in the same ChartField string as all other unit expenses and revenues.


It is good business practice to establish formal agreements/purchase orders for external customer usage.  This will address agreed-upon pricing and payment terms, any risk management issues, especially if non-UF personnel will be on-site (e.g., using equipment in facility), address potential data security concerns, and other legal protections.  Contact the UF General Counsel for questions regarding revenue agreements.

Unrelated Business and Income Tax and Sales Tax

For EBA units, other than Auxiliaries, external sales should be incidental and represent a small portion of the Service Center’s revenue. A primary reason for existence of a service center is to provide necessary/convenient services to University of Florida users.

If external usage is more than incidental, it could subject the University to Unrelated Business Income Tax (UBIT) implications; specifically, the University may have to pay tax on external sales since it represents income earned by a tax exempt entity that does not result from tax exempt activities. If tax is assessed, the tax burden is borne by the charging entity (EBA).

External sales may also be subject to sales tax on goods or services it provides. Contact Auxiliary Office with more questions.

Refer to the UBIT and Sales Tax websites.


Educational Business Activity

Revenue-generating activity from the provision of goods and/or services. Such activity enhances, promotes, or supports the University’s instruction, research, public service and campus support functions, and other educational and support functions in order to meet the needs of students, faculty, staff, and members of the public participating in University events and programs.

Last Reviewed

05/01/2020: reviewed content


Educational Business Activity/Auxiliary Accounting: (352) 294-7236

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