Gift cards and gift certificates can sometimes become difficult trying to figure out how to account for them in your QuickBooks file. Simply stated, when a person purchases a gift card or gift certificate from your business, that money is considered a future liability. In your QB chart of accounts, you should have an account called “Current Liabilities” (easiest way to do it). You can even setup a sub-account of gift cards too. This is the account where you want to track all of the unredeemed gift cards and gift certificates that your business sells. When you setup this account (if it isn’t already), it should be classified under the “Other Current Liabilities” account in the Chart of Accounts. In your items list, you should have an item setup as a gift card or gift certificate.
Now we gotta take a look at the other side. What do you do when someone walks into your store and would like to purchase items using their gift card or gift certificate..? It’s really easy. You will want to create an invoice for that transaction. By creating an invoice, it decreases the amount in the “Current Liabilities” account and increases your “Accounts Receivables” account. This is EXACTLY what you want to do.
I’m gonna throw in a tricky part. What do you do when someone wants to purchase items in your store and the amount is greater than the gift card or gift certificate..? You’re still going to create an invoice and record all the items that they want to buy and enter a sub total. Select an item (which is going to be your gift card or gift certificate) and enter in the amount.
Here is where I’m going to put the warning part in: DO NOT under any circumstances use the “Receive Payments” transaction when accepting a gift card or gift certificate. You’ve already taken the $$ for the gift card or gift certificate already when they initially purchased it from you. If you do this, it will just increase your sales incorrectly and that’s NOT what you want.
I hope at the end of this article, you understand how to accept gift cards and record them properly in your QuickBooks file. Please don’t hesitate to contact me should you have any questions!