Groupons

When you accept payment for a Groupon or other similar program, it is treated just like a gift certificate.  You accept the liability to redeem the Groupon sometime in the future. To fulfill that obligation and track the transaction in QuickBooks, you need to set up a liability account and special items to use on a Groupon invoice.
 

Setting Up QuickBooks to Accept Groupon:

1. Create an Other Current Liability account and name it something like "Groupon Certificates” create a new item of type "Other Charge" and name it something like "Groupon Cert."

When setting up the item:
- Click the Account drop-down arrow and then click the other current liability account, "Groupon Certificates”, you created in Step 1.
- Leave the Amount field blank. You will fill in the amount at the time of sale.
- Make the item non-taxable.
2. Create a new item of type "Payment" and call it "Groupon Payment" for example.
Using this method, the sale is recorded as a liability. The income will not show in your income account until the Groupon certificate is redeemed.
 

How to Record a Groupon Redemption:
1. Create a new invoice.
2. On the first line, enter the "Groupon Cert." other charge item with the amount for which the Groupon certificate was purchased. You may enter additional product or service information here as well.
This increases the “Groupon Certificates” other current liability account by the amount of the Groupon certificate.
3. On the second line, use the “Groupon Payment” payment item to show the amount you received in payment for the Groupon certificate.
This increases your bank account when you make your deposit. Accounts receivable is not affected.
 

Note: The balance of the invoice should be zero.
 

NOTE: If you want to record the actual value of the product/service.  Please see the following additional steps in this example:

Groupon deal: 1 service for $55 value, sold for $25. Groupon pays you $11.87ea. which includes their fee and a credit card transaction fee. 

There are 4 Key elements to recording your Groupon Sales in QuickBooks:
1. Initial Sale
2. The Groupon Fee
3. Redemption
4. Sales Tax

STEP 1: Create a Groupon Sales Receipt
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 “Groupon Sales” (linked to a new Income account – Groupon Sales) based on the quantity sold at the rate we sold them for. So if the promotion is a $55 Groupon for $25 and we sold 100 of them then we record a sales receipt in QuickBooks for a quantity of 100. Total Sales proceeds of $2,500.

The Groupon 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. “Groupon Fees” Service Item as COGS – Cost of Goods Sold.  This item can also be setup as a percentage.  For example, Groupon takes 50% and then usually 2.5% credit card processing.  Enter 52.5% in the amount field during item setup. This should equal what they deduct for their fee $1,312.50 and the Sales Receipt should total $1,187.50.

STEP 2: Make Groupon Deposit
Banking/Make Deposits/Select payment/Close

STEP 3: Client/Customer Redemption Sales Receipt and Recording Sales Tax
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”.

NOTE: Sales Tax on this can be tricky.
•Do you collect Sales tax?
•But what if you collect Sales tax?
•Should you collect Sales Tax on the gross sale?

I strongly suggest that you contact your state’s sales tax authority (in Florida this is the Florida Department of Revenue 800-352-3671). You can call them anonymously to give them the details of a transaction and have them explain what the correct Sales Tax treatment is. They are extremely helpful.

Create a Sales Receipt for the client/customer. The first line item will be your actual product/service item and normal value as taxable (if it is in fact taxable). The second line item will be your Groupon Redemption item which is non-taxable or partially taxable depending on your product/service item and state. The total amount of this invoice should be the taxable amount owed.