Why do eGiftcards count as income twice when in reality I only received the money once.

[CuttinAbove]

Why do eGiftcards count as income twice? When in reality I only received the money for the Gift Card one time and one time only?

[ryanwanner · Accepted solution]

Hello @CuttinAbove 

eGiftCards and physical Gift Cards all show as income only when the card is redeemed.

When the card is loaded the first time, you will receive the money, yes, but the dollar amount doesn't change your sales figures for the day. When the card is redeemed, your sales figures will rise, but you will not receive any funds since you already have the funds.

In theory, when you sell a gift card, you should move those funds into a separate bank account. Gift card funds aren't technically yours: you are holding the customers' money for the anticipation of the sale in the future. Once the card comes back, you move the funds into your operating account. If the unthinkable happens and you have to close, you may be held liable for any open funds on the cards. Having the funds separate means you could return the funds.

Of course, if your company is able to do this, I'd like to know how. 🙂

Hope this helps!

[CuttinAbove]

Yes that makes sense. But my quick books is off, by the exact amount of the eGiftcard used. Why should I have to move that money around, if SQUARE had set it up as a redemption instead would make so much more sense. Considering I have already received that money it should be redeeming it, Not counting it as income two times? 

My quick books is right and only counting the income once but my square report itself is off and counting it twice. 

If I were to ever get audited my Square reports are showing that I'm making more than I'm receiving and more than what's in my business' bank account.

[ryanwanner]

@CuttinAbove 

First thing to check is that your Gift Card sales are listed as a liability in QB—since that money isn’t technically yours until the card is redeemed at a later date, it doesn’t count as income. Technically, gift cards should be viewed as a loan: one that’s repaid when the card returns for redemption. Once the card is redeemed, your gift card liability line item will be reduced the amount of your sale. 

square doesn’t report the income twice. You’ll see that there is a separate Gift Card Sales line on your reports. This is not counted as income nor should be in any QB data file. If you were to go to your register right now and issue a new card, your net sales for the day wouldn’t increase. If you are counting the initial GC sale as income in your internal reporting , then I can see where your trouble lies. Yes, the funds used to purchase the gift card is available to you right away, but see my prior response as to why it’s best for you to lock those funds away if possible. 

Conversely, when the GC is redeemed, your Net Sales figures will go up since you’re paying off the debt of the prior purchase, but you will notice your transfer/deposit numbers don’t increase since you already have the funds in your possession.