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Business with Outside Entities


Fee-for-Service Educational Activity (FSEA) 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 FSEA to fund equipment replacement, cover administrative overhead, federally unallowed costs, and re-investment into FSEA operations.


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 FSEA 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 (FSEA).

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

Refer to the UBIT and Sales Tax websites.

Last Reviewed

Last reviewed on 03/20/2024


Auxiliary Accounting: (352) 294-7236

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