What is the best way to sell and redeem non-Square gift certificates?

[cowgirlglamour]

We sell paper gift certificates,  when we sell one,  we run the sale thru the Square as a non-taxable sale.  When the gift certificate is redeemed, we charge sales tax on the full amount.  We are concerned that we are counting gross sales twice,  once when we sell the certificate and again when merchandise is purchased and paid for with the certificate.     I suspect we are not doing one or both transactions properly.   Your help is appreciated.

[#2]

It's been a while since some of you posted about this but didn't see an announcement in the thread:

Discounts now allow for "Apply discount after taxes"

You can create a "Gift Card/Certificate" discount.

Set it to be variable $.

Go to advanced settings section and click Show settings.

There you can toggle on the after taxes option.

In my experience discounts is the best way to redeem non-square cards or certificates.

If you try to use tender option, it redeems the full amount unless you split ticket which takes more steps and then counts as a double sale (one for buying the card, one for the card buying the items) which you need to remember later for your reports.

[EJ_]

Hi @KEPS

Both the sale of gift cards and their redemptions would be accounted for in your reporting. 

Was this what you're referring to? 

[KEPS]

I'm talking about redeeming paper gift receipts.

If I sell one under a Gift Certificate titled category, how are you suggesting I redeem it? 

[KEPS]

...because for nearly 2 years when I redeemed them, I would go to payment, other, gift certificate... but it always counted as double revenue.

[EJ_]

@KEPS That's one of the things that occurs with using Gift Cards or Gift Certificates. You'll receive the sale for the gift card or gift certificate itself, and also you'll receive the sale for whichever item the customer redeemed the gift card for. 

The Best Answer in this thread touches on this issue and provides a workaround. 

[purplecow]

We are in the same situation and will just begin with the Square Register shortly.  Have you come up with any solutions?

[purplecow]

Have you come up with a better solutions to this problem?

[whiskeyandlace]

Sounds to me like our hands are bring forced to purchase Squares Gift Cards and use through the system. I have only had one transaction for a gift certifcate...I accepted cash only, paper clipped it with a note and put it in my till. When the person comes in with my paper GC I will just pull the money out and use as cash transaction. Until something else comes along to cure this situation...I guess that's what I will do. Glad I read this now...sounds like I may have saved myself a huge headache!

[abc1889]

I have stock Gift Card (GC) amounts under my discount tab. My issue is when I go to check out a guest (we are a small Inn), it subtracts the (GC) amount from a pre tax amount. It only calculates tax on the remainder, not on the original total with tax. So a bill for 388.80 minus a (GC) of $330, should leave an amount of 58.80. When I enter the discount (GC) it subtracts from my pre tax amount $360, leaving $30 and tax only added to the $30 amount. I need the tax on the whole $360 amount.

This would help with the double income as well, as the days total would be $58.80.

Sorry if this is not clear, as this is my first post on this support center.

[Chad]

Hello @abc1889! Welcome to the Seller Community! 

Currently discounts in Square Point of Sale are applied before any taxes. Having the ability to apply discounts after the tax is currently a feature request! 🙂

[abc1889]

So sorry. What is a "feature request" ??

[Chad]

No worries @abc1889! The term feature refers to an ability that Square Point of Sale has. For example the transaction report would be a feature. So a feature request is a suggestion to add a new future. 

I hope this clears things up! 🙂

[SimpleCoffee]

 I'm not an accountant and struggle with some numbers (this is why I use Square! 😄 ), but it's my understanding that Gift Certificates/Cards are considered a liability in accounting, or deferred income. NOT regular income.

If using the Gift Cards, the balance is kept off-books until it is redeemed, which is why there's no sales tax due on the purchase of the gift. It's also administered by a third party, so the money is sitting in their account accumulating interest until a customer uses it, at which time it is "paid" to us. I'll assume that "Gift Card Sales" in the Reports shows as a negative ($0.00) as with Discounts and Comps... I don't use the cards yet so I don't know.

I know the US government made retailers more accountable for any restrictions placed on gift cards on the consumer end, as millions of dollars were going unredeemed and, I assume, were just being applied to the bottom line.

I don't know if the Square Gift Cards have an expiration date, but when I make up paper certificates I set an expiration date of one year. I also place that "income" into an accounting category of "Gift Certificate Sales" in my budgeting program. My certificates have an "info tag" piece that I keep in my records and review occasionally. When one is redeemed I discount the sale for the amount of the certificate, and remove the "income" from my accounting category and place it into the main income category. This does not address the need to collect sales tax, but at the moment I just eat it (5 or 10 bucks in sales every now and then isn't killing me).

When a gift certificate expires, I'll also "move" that amount from my accounting category. In my case, if someone came in after the date I'd still honor it, because I'm small.

Surely Square can ask their *ACCOUNTANTS* how to set this up to properly denote the transaction as a LIABILITY? We need a good solution, please.

[VanKalkerFarms]

@SimpleCoffee, When you sell a gift card thru Square the money goes to you just as any sale would, no one is holding your funds.  Tax is not charged on gift card sales because a gift card could be bought in one state and redeemed in another state etc. Sales Tax is charge when redeeming a gift card though.

[SB1981]

Thank you to everyone who has responded.  We've just recently (about 2 weeks now) started accepting credit/debit cards in our business after many years of only accepting cash/check.  So this is all new for us.  The Square registers are great, we like them and our customers are very happy.  However, as we have sold & donated paper coupons (for ice cream cones) and paper gift certificates ($5.00 value each) for yeats we now find ourselves in a quandry as to how to properly handle these - the sale, the donation, the sales taxes etc.   Worried about double counting the sale for example or how to "donate" a gift certificate then what to do when that donated GC or coupon is redeemed.   Since we gave it away,  the use of it should not increase our sales nor should sales tax be owed (as no cash or payment was ever received).   Talked to Square support and to our surprise they really had no easy answer as to how to handle these situations in any sort of efficient manner.  I'm writing this in the hopes (as support told us their product team reviews these notes) that Square realizes this sort of thing is very common for small businesses like ours.   They really need to work on a solution with their software that allows for a simpler way to handle gift certificages/coupons as well as how to handle donations of same.   Thanks for listening - Square are you listening?   

[SimpleCafeOR]

Oh, my!  I hadn't even thought about the distinction between a gift card that was sold and one that was donated.  I think going forward I'll have to make some kind of distinction on the GC and when donated GCs are redeemed, not run the order through the POS at all.  This would cause a problem for anyone using Square to track inventory, however.

I came here looking for solutions and only found more questions, unfortunately...double income, discount pre-tax, sold vs donated...not helpful.

[purplecow]

Hi,

     I just read your post as I was searching for the answer to the  same question you asked.  I also own an ice cream store and sell gift certificates as well as donate them.  Have you found a good solution yet.

[AshleyK]

@purplecow thanks for reaching out. In the case where you want to donate, or give away, a gift card, but still want to track the balance and it's affect on your sales, then your best course of action will be to sell a gift card for a the donated balance and then apply a 100% discount to it.

You can issue your customer a gift card from the Point of Sale app and discount the sale to have a $0 charge for that gift card, which will still load the gift card, but will not cause double reporting:

1. Make sure you’ve created a discount for this specific purpose. 
2. From your in-app item library, tap Gift Cards.
3. Tap the gift card item to select the amount to be loaded to the gift card. If you’ve selected a variable priced gift card item, enter the amount.
4. Swipe the gift card to activate it. The gift card amount will be applied to the current sale.
5. Tap the list icon and tap Discounts.
6. Tap the discount you’d like to apply to the current sale. If this is a donation, then choose the 100% discount.
7. Complete the sale by processing your customer’s payment.

You can track the remaining balance on this gift card and the system will show the sale as being completed by an already loaded gift card so your sales don't double. 🙂

Let me know if you have any other questions!! 

[purplecow]

Hi,

     When we first open, we plan to accept paper gift certificates from our previous year as well as continue to sell paper certificates for at least the beginning.  We just want to figure out how to redeem and sell our paper certificates.  Thanks!

[isabelle]

Hey @purplecow!

To sell a paper gift card, you can just add an item and title it Gift Card.

If a customer comes to your store to pay with a paper gift card, you can actually mark it as paid by Other Gift Card or Certificate:

I hope this is helpful! ✨ Let me know if you have any questions about this or if this information was unclear. 

[purplecow]

I get how to sell them, but how do i redeem them so it isn't counted twice.  Thanks!

[flourishmarket]

I created a Discount and called it "Gift Certificate Redemption". So I ring in the item they want, then apply the Gift Cert. Redemption discount (in the Discount Category), this reduces the amount for the customer to pay. This either creates an amount due (pay with cash, check, cc), or it creates a balance remaining on their gift certificate. I just take their paper certificate, cross off the old amount it was good for, change it to the new amount, and make the adjustment in my GC book. Do this over and over until it's used up.

This messes with the appropriate sales tax that should be collected, but it's the only way to not duplicate the income that I've found.