Is a customer discount for professional services an expense or income account?

cjk-135 · ‎December 10, 2018

In a single member LLC, if I want to provide a discount on professional services to certain customers when I do their invoice, I know I should set up an account for the discount, in the chart of accounts.

What I'm not sure of is which type of account it should be. Is it an expense account? An income account? Can't find anything anywhere that tells me how the discount is accounted for.

The discount might be due to the volume of work they do with my company, or because they asked for 'a little help' on a tough job for them. Or due to loyalty or the length of our working relationship.

Thanks!

SkinnyRaven · ‎December 10, 2018

A disount is a price reduction not a cost of doing business, use an income account.

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SkinnyRaven · ‎December 10, 2018

A disount is a price reduction not a cost of doing business, use an income account.

cjk-135 · ‎December 10, 2018

Well, since you put it that way, it makes perfect sense. Thank you! :-)

cjk-135 · ‎December 10, 2018

As I think about it, if say $2000 goes into the income account as discounts which the company never gets paid for/never receives then that $2000 would result in a negative unpaid amount. Then that $2000 would show up as a loss? Am I thinking about this right?

SkinnyRaven · ‎December 10, 2018

A discount will offset your income by the same amount.

cjk-135 · ‎December 10, 2018

Awesome, thanks. I'll do some trial and error and see how it works.

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Is a customer discount for professional services an expense or income account?