How to record a donation in the form of a Gift Certificate?

@userqb1 

There is no accounting entry when you donate a gift certificate since, as you mentioned, it doesn't cost you anything.  Your expense will be what it costs you to provide the service when the gift certificate is redeemed.  It's no different than a paying customer except they are getting the value of the gift certificate as a discount. 

Thanks for your response. However, when the gift certificate is redeemed in-store on our POS System which integrates all of our transactions into Quickbooks at the end of the night. So as of now, the transaction is just sitting in our chart of accounts in the undeposited funds. 

So you're saying that we should just delete these transactions?

Or

Could we create an account to put the gift certificates redeemed transactions in?

Thank You 

@userqb1 

When you mentioned gift "certificates", I assumed you meant old-school, paper gift certificates.  For gift cards that need to be registered in your POS, the best solution, IMO, is to create an item in your POS system called 'Gift Card Donation Offset' and use that to offset the value of the donated gift card. So, if you donate a $50 gift card, for example, ring up the card for $50 and return a Gift Card Donation Offset item for -$50, which will net the sale to $0.  That will eliminate any entry to undeposited funds.  At year-end, when you take a physical inventory, you will have a quantity of Gift Card Donation Offset items that you will need to zero out.  Hope that helps.

Services donated are not deductible.

However, business owners can deduct the expenses the business incurs while providing services to a charity. So while you can't simply deduct what you would have charged otherwise, you do get a small benefit.

It was helpful to me when I learned this:

Services donated are not deductible.

However, business owners can deduct the expenses the business incurs while providing services to a charity. So while you can't simply deduct what you would have charged otherwise, you do get a small benefit.