You’ve most likely heard of Groupon by now?
Have you thought about how to do the accounting for it?
According to Forbes, Groupon is the fastest growing company in history.
(Here’s how to account for the Groupon transaction in QuickBooks.)
- There is a good chance you will want to be featured with Groupon if you haven’t already.
- Then you definitely want to know how to handle Groupon Sales in QuickBooks.
- The single easiest way to learn how to account for Groupon sales is to watch my video on Accounting For Groupon Sales in QuickBooks!
- Learn my trick to recording your Groupon sales based only on what you receive for the sale.
- What will not work in terms of setting up your Groupon Promotion in QuickBooks
There are 4 Key elements to recording your Groupon Sales in QuickBooks:
- Initial Sale
- The Fee
- Sales Tax (2 Methods for Handling Sales Tax with Groupon Redemptions in QuickBooks)
The initial sale is a non-taxable sale of a future benefit.
No tangible goods are being sold so no sales tax is collected at this point. In QuickBooks we simply record the sale of a service item based on the quantity sold at the rate we sold them for. So if the promotion is a $40 Groupon for $20 and we sold 300 of them then we record a sales receipt in QuickBooks for a quantity of 300. Total Sales proceeds of $6,000.
The Fee has to be deducted from the Sales proceeds.
To arrive at the net check we receive from Groupon, the fee needs to be deducted. We record this transaction in QuickBooks as a second line item in the initial sale.
The Groupon Redemption is part of the final sale.
It will be tempting to set this up as a payment method, but this won’t work because you will not be receiving any money for this part of the sale in QuickBooks. The trick here is to set up a “Discount” item called “Groupon Redemption”.
- This will enable you to track the redemptions to be sure there are not more redemptions compared with the total quantity sold.
- You want to get the transactions recorded correctly in QuickBooks.
- Mistakes can be costly in terms of the time to identify and correct them.
- It is important to get your Groupon Sales right in QuickBooks
Sales Tax on this can be tricky.
If you have a service business of course this is not an issue.
- But what if you collect Sales tax?
- Should you collect Sales Tax on the gross sale?
- Some people have indicated they do not want to remit sales taxes they haven’t collected.
First and foremost I have to suggest calling your state’s sales tax body (in California this is the State Board of Equalization). I have called them in the past, anonymously to give them the details of a transaction and have them explain to me what the correct Sales Tax Treatment was. They were extremely helpful.
With that said I am going to show you 2 methods for handling the Sales Tax in QuickBooks for Groupon Sales.
- Collect tax on the gross sale
- Collect tax on the net proceeds actually received on the sale.
The web cast below will show you how this all works.
If you found this helpful please post your comments here and/or on YouTube.
Want the QuickBooks file used in this screen cast so you can review the setup in greater detail?
The file is yours for $5