Our Customer Service Department is frequently asked how to handle discounts properly. We suggest a simplified, easy-to-follow method. One of two things that are most important to identify first is whether the gift is a Section 1 or a Section 2 item. Based on that, here are our suggestions.
If the item being given to the customer is a Section 1:
- Add the item to the invoice.
- Tab across to the Discount column and type 100 (or the applicable percent of discount being given).
- a. If other discounts are being given as flat dollar amounts, such as on a discontinued product, manually calculate the total discounts and add a Dollar field in the lower left corner of the invoice.
- If you collect tax on the discounted amount of product, right-click on the invoice and verify that ‘Tax Before Discounts’ is unchecked.
(If you’re uncertain if your Boulevard software is set up to tax before or after discounts, go to Preferences under the File menu. Select the Sales tab. The second checkbox is ‘Compute sales tax before discounts’ on invoice. If this is checked your Boulevard will calculate tax on the retail value at all times. If the box is unchecked, your Boulevard software will calculate tax on the invoice after any discounts given.) - Using the new, 2011 feature, Discount Type, make your selection (E.g. Hostess Credit).
By following these steps, Boulevard will remove the item from inventory, show the retail value of product as a sale, and show the retail value of the product given away in the ‘Gift Section 1 column‘ on your Weekly Accomplishment Sheet. By showing the offsetting discount amount in this way, you are reducing your tax liability against money you did not collect.
If the gift is a Section 2 product, the steps are even simpler.
- Add the item to the invoice.
- Tab to the Type column on that line and select Gift.
That’s it – as simple as can be. By following this suggested method of handling a Section 2 gift, the customer will not see the price you paid for the item and the value of the gift will appear in the PCP column on the WAS. The reason we recommend handling the transaction this way is because the Section 2 product is a write-off when it is bought. No discount should be shown; instead, just zero the price for the customer’s benefit. Now her history will be accurate showing what Section 2 items have been given to her.
Other Types of Gifts
There are always other situations where we find ourselves giving a gift of Mary Kay product. For the best advise, make sure you check with your tax advisor. Your Help menu has a variety of topics and selections to help in the Business Tips chapter.
To view other Boulevard invoicing features, visit the Invoicing section of our website.
{ 2 comments… read them below or add one }
So if I give as a donation: add to invoice, discount 100%, no tax. This gets out of inventory and then do an expense for it. Right?
If I want to take off my shelve, add to invoice and write off as an expense. Right?
So if I give as a donation: add to invoice, discount 100%, no tax. This gets out of inventory and then do an expense for it. Right?
Donations are a little different. Is it a business donation or a personal donation? Check with your accountant to find out which offers the greatest benefit. For a personal donation, you would then handle the transaction just like personal use (You buy the product from your business at cost.). If your business donates the product, we suggest using a customer named Business Supplies for the invoice. Invoice with a 50% discount, then expense the amount of the invoice under an appropriate category (E.g. charity, etc).
If I want to take off my shelve, add to invoice and write off as an expense. Right?
If you’re taking product off of your shelf because it is expired, you can invoice the item to Business Supplies at 50% plus tax on the retail – this is the cost of goods. Then expense this total to a category such as Old/Expired. An accountant can give you an accurate list of appropriate business use of items that would allow an item to be expensed. Common reasons include product lost or damaged in the mail to a customer, expired product, and using an item as a demonstrator.