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.

[Sean · Accepted solution]

Hi @cowgirlglamour, and welcome to the Seller Community. We're happy to hear from you! This is a bit of tricky situation to handle, as there is no best approach to handling gift cards in this scenario. You are correct. The gift would be a part of your gross sales twice, upon sale and redemption. I've heard from a couple sellers on this topic in the past and here were a couple of there thoughts:

- Use the other Tender > Gift Card. Each time you look sales, subtract this amount. 

- Track sales more accurately outside Square using a spreadsheet application (ie Excel, Quickbooks...)

- When a gift card is redeemed, apply a Discount to remove the cost of the item being purchased. Name the discount "Gift Card."

Hope this helps! 

PS) If my answer solved your problem, would you mind marking it as "Best Answer"? That'll help the rest of the community find what they're looking for. If not, just write back, and I'll continue to help. Thanks!

[flourishmarket]

Having only recently started selling and redeeming gift certificates, I realized that I am having the same problem with the gross amount being calculated in twice.  It is unfortunate that Square can not properly handle these transactions - it seems a fairly basic operation.  I plan to change the way I redeem certificates to the "discount" procedure mentioned above.  It needs to be as simple as possible for me and my business.

[flourishmarket]

Well, I spoke too soon.  The "discount" method does not take into account that the customer is liable for the full amount of sales tax, not the amount left once the "discount" (gift certificate) is applied.  Back to the drawing board! 

[Sean]

Hi @flourishmarket. Totally understand your frustration. I'll be sure to pass along your feedback! 

[cconner27]

I too have the same dilemma. I came up with the discount method on my own prior to looking for a solution here for the afore mentioned reason that the full amount of sales tax is not charged. Hopefully Square can consider this in future updates. 

[Stressed2018]

I think I've found a back door solution. Example:  You have  a 7.00 non tax item and a 15.00 tax item. In my state that would be 22.90 with tax. Customer is using a 50.00 GC.  Now, you add a $ discount of 22.90.... problem is the .90 doesn't deduct because it is tax owed. So... create a NON tax item called tax for this sale for .90 cents and add to sale. This will charge customer the .90 tax owed and reflect a 0 bal as it should.   Ring sale under OTHER tender, if there is a balance on customers GC, write it on their gift card and initial for their next purchase. Print TWO receipts (one for you) and deduct the sale at end of day (to avoid double gross) and also deduct the created tax item amount so that you can pay your taxes owed on sale. Make sense?

[Holodeck3D]

Hi Chad -

We have the same issue with Square not being able to address issuing a Gift Certificate.  

Sqaure has a Gift Card payment at the POS, how are we to process the payment made a few weeks/months earlier in Quickbooks, if we are swiping the card through Square.

Square has known about this issue for at least 7 months from this thread, and I'm sure for many years, and still no solution.  Why are we paying you almost 3% of our gross revenue, if you can't serve your customers?

Please have your tech team move this to the top of their projects.

[Chad]

Hey @Holodeck3D, I'm a little confused by your question since you mentioned swiping the card. Are you using Square issued gift cards? 

[OddbirdGifts]

I am switching to Square for Retail from Shopkeep. They offer Gift Certificate as a built in item and the ability to check as a liability. That makes tracking super easy. <--- Great feature opportunity! Couple items I noticed in the thread - check with your State Attorney General's office. Several states have declared it illegal to put expiration dates on gift cards or certificates. Boils down to taking money without offering services. I only place an expiration date on Promotional Gift Certificates that I might give out for a donation. I also place more restrictions on it - ex. not usable on Fine Art.

[thecottage]

I too have struggled with trying to do this. The easiest method I have found is to take cash or check only when someone is buying a gift certificate. That way, after the sell is made, you can go back in and cancel out or refund the transaction so that it's not showing as income . This will not work with credit cards due to Square refunding the money to the card. Square needs to have options on how we refund .

[ProfImageEnhcmt]

Same issue! We didn't even realize this was double revenue until we started working on taxes this year. Now we have a lot of things to sifting through and fix... I'm astonished there is not a solution for this. Square's market is small business - so many small business use paper gift cards! In addition, trying to redeme Groupons (also something a lot of small business do) comes up with a similar problem. We've already gotten the income directly to the bank from Groupon, and we have to collect sales tax when the use the Groupon. We've ended up just creating an item in our inventory called "Groupon tax", but at the end of every quarter when we do sales tax and the end of every year when we do income tax, we have to manually remove the total for this "Groupon tax" item from revenue and add it to taxes. And I'm assuming this deams any tax information or forms Square generates useless because the imput data isn't correct. I beg of Square to please solve this.

[KEPS]

I, too, just discovered (when doing taxes) that my paper gift certificates are being counted as income TWICE. 

When I sell my paper gift certificates, I sell them as non-taxable. When I redeem them, I click on "other" payment, and then choose "gift certificate", enter the GC total and the til pops open. I thought all was well! How do I possibly go back now and deduct all those Gift Certificate totals???  When I run a report for the year, I see my cash totals, credit card totals, and the "other" (check,gc,other) totals are clumped together. How do I find out what payments I took as checks, gift certificates, and other???? I need some serious help soving this mess. 😞

[Chad]

Hello @KEPS, I'm sorry to hear about the trouble with your reporting! I have some tips. 

If you wish to view your totals for the year with a breakdown of all your payment types, use the Sales Summary Report on your Square Dashboard. This will give you the transaction totals for your other, cash, and card sales. 

You can also look up specific sales under the Transaction Report. You can sort this report by payment method to find all of your gift certificate transactions. You can refund these transactions and it will change the amounts reflected on the Sales Summary Report. 

Please let me know if I can help with anything else! 😀

[KimberleeG1924]

I feel that the option to sell paper gift certificates is purposely left out of POS as square profits from sale of cards.  I am a small ticket company and many times customers by super small gift certificates, such as $5.  Why would I spend $1.25 to $2 per card on a $5 sale?  Square needs to fix this problem.  

[EJ_]

Hi @KimberleeG1924 and thanks for your thoughts on this. 

The Other Tender option was built with this payment method in mind.

Many sellers choose to sell their own gift certificates with Square. You'd need to create the gift certificate as an item for sale, and you can choose the Other Tender option and select "Other Gift Card" as the payment method. 

[KEPS]

THIS DO NOT WORK!

It counts as double revenue. It will deduct the total gift card from the tendered sale, but be counted as double revenue on your report at the end of the day. Trust me.... I just got done going through 2 years of sales receipts fixing this headache. It appears on your register as if it is working while you are in transaction.... but it DOESN'T. 

[theplantbase]

We are a new business and having a difficult time with our own gift cards as well. We didn’t realize the issue of a GC being counted twice for income. 
We’ve tried ringing in $1 for an item “Gift Card” and then charging a $49 tip if person wanted a $50 gift card. i don’t even know if this makes the situation worse or better. So frustrating but with the holiday season upon us, we need to figure this out. 

[purplecow]

I'm just starting out with Square.  Did you come up with a solution that works?

[boardwalksun]

When I use the "other tender" option, it assumes it is for the full amount of the sale.  I don't get the variable option.  I want to be able to ender the amount of the "other tender"

[KamiG]

Yes! Using the other option isn’t working for us. Example : if a ticket is 45.00 and the gift certificate is only for 25.00 the system ignores that at assumes the whole ticket is paid instead of treating it like a split ticket. This is a huge problem for us.