This article was updated on 21 July 2022 following pricing changes.
Introduction
Gift Vouchers can appear as a complex process to manage for the purposes of your tax return. This is because in the frame of the business, under the cash basis system of accounting (as consultants use), it appears twice in both income and expenses.
Example: Claire takes a payment of £59.50 from a member for a 12 week gift voucher. This would be classed as income.
The next day, Claire orders a gift voucher which is priced at £59.50. This is classed as an expense.
The £59.50 money is now in ‘credit’ at Slimming World.
The next week, the gift voucher is provided to the member and they use it in group. This would be classed as income (and appears on your PFS Document).
Slimming World then pay the money to the consultant depending on their retained earnings, and is credited as a sundry. This is classed as income.
As such, from the example above, there would be a mix of transactions to log for the account:
- £50.50 income (payment from member)
- £50.50 expense (payment to Slimming World for the Gift Voucher)
- £XX.XX income (credited as a sundry from Slimming World)
Why do we need to log it in this way?
Your Slimming World Franchise is a business – and therefore when looking at your accounts, you would see two incomes and one expense for this item.
Although the money does not stay with you (which is provided by the member when they purchase the Gift Voucher), the money goes through the business and must be logged.
If you incur any charges with the initial payment (such as a charge for a cheque to be processed, or for use of a EFT Card Machine), you should log these separately as expenses as usual.
How do I log this on my MalgraBooks Spreadsheet?
As with the above, there’s three steps which need following.
First, add the amount received from the member to purchase the gift voucher / countdown extension within your Income section of your spreadsheet/table
Next, you need to show that you’ve then purchased the gift voucher from the eshop. It may be part of a larger order for the eshop (so no need to split it out) but if it’s paid separately on its own, add the amount to the expenses table
This effectively ‘cancels out’ and seems really odd to do – however the money received counts towards your turnover which is important to show where the money flow is (for turnover) as part of your business records and more critically if you’re heading towards the VAT threshold.
Finally, there’s the part where the member redeems (pays with) the voucher. If this appears in the sundries section on your account, check this article for details of how to account for sundries.