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View Full Version : Discounts? Expense?
KristinaD
02-13-2009, 01:30 PM
Hey everyone. I have yet another tax question! :) We're not trying to do it ourselves, and it is not fun! :) Are discounts considered an expense. For those using consultant office..."Other line item discounts" in the quarterly report...is it a expense or just a loss of profit?? Please help!!!!! http://www.wahm.com/forum/smileys/smiley5.gif
WooTini
02-15-2009, 03:32 PM
It depends on how you put your sales in to begin with.
You're not using any sort of bookkeeping system (Quickbooks, MYOB, etc), are you?
If you have just tallied your sales as being the same as the amount you sold the items for, then you have already avoided including the discounted amount in your numbers.
For me... I do use a bookkeeping system.. and when I do an invoice for a customer, I do charge the full retail amount, and then I have a second line on the invoice for any discount I might give. This does two good things for me... it 1) keeps a running total of how much I have given away in discounts and 2) allows me to charge the full sales tax rate to the customer (because I've paid Jafra the full amount).
I don't know about your consultant office... but if those are discounts that were given to you... they shouldn't affect what you're doing.
You should know how much you paid for your product. (A)
You subtract how much product (your cost) that is sitting on your shelf. (B)
That answer gives you how much your product cost was for the year. (A-B = C)
Now you add up how much you sold the items for (not including taxes and shipping - those are separate expenses). (D)
So if you had $1,000 in sales (D)... and your answer to the first question was $600 (C) (product cost that was moved through you)... then your gross profit before other expenses is $400.
Other expenses = phone, office supplies, etc.
I think you're making this harder than it is.... it really is quite simple if you just have your customer orders for the year. Add 'em up.
Then add up what your product cost was from BC and deduct the new product that you have sitting on your shelf (inventory is not an expense).
Holler if you need more help. smileys/smiley23.gif
You're not using any sort of bookkeeping system (Quickbooks, MYOB, etc), are you?
If you have just tallied your sales as being the same as the amount you sold the items for, then you have already avoided including the discounted amount in your numbers.
For me... I do use a bookkeeping system.. and when I do an invoice for a customer, I do charge the full retail amount, and then I have a second line on the invoice for any discount I might give. This does two good things for me... it 1) keeps a running total of how much I have given away in discounts and 2) allows me to charge the full sales tax rate to the customer (because I've paid Jafra the full amount).
I don't know about your consultant office... but if those are discounts that were given to you... they shouldn't affect what you're doing.
You should know how much you paid for your product. (A)
You subtract how much product (your cost) that is sitting on your shelf. (B)
That answer gives you how much your product cost was for the year. (A-B = C)
Now you add up how much you sold the items for (not including taxes and shipping - those are separate expenses). (D)
So if you had $1,000 in sales (D)... and your answer to the first question was $600 (C) (product cost that was moved through you)... then your gross profit before other expenses is $400.
Other expenses = phone, office supplies, etc.
I think you're making this harder than it is.... it really is quite simple if you just have your customer orders for the year. Add 'em up.
Then add up what your product cost was from BC and deduct the new product that you have sitting on your shelf (inventory is not an expense).
Holler if you need more help. smileys/smiley23.gif
