Using Gift Certificates with QuickBooks
This information describes the sale and redemption of gift certificates using QuickBooks financial software, not Point of Sale (POS).
For correct financial reporting, Gift Certificate sales should not be included in sales or income reports for taxes. Income and sales are generally recognized at the time the product or service is sold, not the gift certificate. I find it helps to think of gift certificates as little loans that your customers give you until they (or the recipient) is ready to buy.
SETUP
Step 1 - Create an “other current liability” account in the chart of accounts called Gift Certificates.
Step 2 - Create an “other charge” item called Gift Certificate leaving the description and price blank. This charge should be marked as non-taxable.
USE
Sales - Using a sales receipt or invoice, create the customer sale as usual. After entering and merchandise or services (if any), enter your Gift Certificate item. Record the gift certificate number in the description field (more on this later) and the amount of the certificate in the amount field. Record and process payment in the usual manner.
REDEMPTION
Create a sale (sales receipt or invoice) for the product or service being sold. Then enter your Gift Certificate item on the next line, again recording the certificate number in the description field. Record the amount being redeemed as a negative number in the amount field.
If the value of the certificate is more than the total sale, enter only the amount of the sale (for a net $0.00 result). The difference remains valid on the certificate.
If the value of the certificate is less than the total sale, enter the entire certificate value (as a negative) and process a payment for the remainder in the usual manner.
TRACKING
Running a report on the Gift Certificate liability account and sorting by the memo field will give you an at a glance report of the history.
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