I have had some cards printed up for fundraising. The plan is to have groups sell the cards for $10.00 each. They would get $5 and I would get $5. I was just thinking about how I would classify this as a sale. at 8% tax would I put it in as a sale for $4.63 + $.37 tax? Or would this be nontaxable?(not likely).
BTW the cards are for (5) Buy one get 1 FREE large pizzas and 1 free dessert pizza
Not really sure what you’re asking. Is this the first pizza you’ve ever sold?
If you “sell” a product “x” for “$y”, you “collect” sales tax on total $s of y. In your case, you’re selling a product for $10, which means you collect an 8% sales tax on the $10. Total plus sales tax would be $10.80.
As for the “50%” sales commission, I’m not quite sure, as I never pay sales commissions.
I’m not real sure you should be trying to sell pizza for $5 or less, you’d have to sell thousands to make money, and any less would put you in negative cash flow.
If you’re thinking about ways to “boost” sales, I’m sure there are several other ways that don’t involve giving your product away at cost, while you’re also paying overhead and labor.
He is talking about fundraiser cards for the school. The card would entitle the holder to (5) BOGO Pizzas and (1) Free Dessert Pizza. He is looking to have the school sell them for $10/ea, and he keeps $5 and the school keeps $5.
And pizzashack, while I am not an accountant, I do believe that you are correct in ringing them up at an amount that comes to $5 with tax for you. Because in essence you are pre-selling the pizzas that you will be giving away for free.
I am looking at this promotion from a different point of view. If you considered the cards as gift or loyalty cards you would not charge a tax on the card. The tax would come into play at the time of redemption. In effect you are selling the opportunity to buy one get one at a later time by way of the card. By taxing the card and the sale of the 2 for 1 you are double taxing.
From my brief accounting education, you are making an exchange of one monetary form for another and there will be no tax incurred. On your balance sheet the sold cards become a liability that is countered by the asset of the cash received. The tax comes into play when you are exchanging a product for a monetary form.
Daddio, that is kinda how I was thinking about it. I am not really selling the product directly. It is more like selling a gift card, but on the other hand I dont plan on ringing in the 2nd pizzas when they order so sales tax would not be charged on those. I think to be safe I may “sell” them to groups for $4.63 +tax. Does anyone else do fundraising cards like this? I made up a packet for schools with discounted pizza rates, offer of personal pizza rewards for students, and fundraising options of these cards or school nights. What is the best way to approach schools with this?
I think you are shooting your self in the foot by going this way. You have no way to account for your food costs if you do not ring in the second pizza. This is something you should talk to your accountant about to make sure you are not making a mistake that could come back to bite you later.
I can’t really see how it would make that big of a difference If I rang it in or not. The food cost would be the same, just the percentage would be different. It should probably be noted that I do not have a POS. So everything is done manually.
Do you not write each pizza down so it can be made? Even in a manual system you should be tracking the sale of each item discounted or not. How do you keep track of the effectiveness of the program if you are not ringing in both pizzas and showing one as a discounted pizza.
This is the common consensus in all the jurisdictions I have seen:
Claim it as a non-taxable sale. Most likely you will be selling these cards to schools or non-profit organizations, just make sure you get a sales tax exemption form from them. You are in essence selling a card for $5.00 to a non-profit organization so you show that in your records and include it in your gross sales but not your taxable sales on your sales tax form.
call it a fund raising card or anything but a gift card, NY state has an abondoned property law on gift cards and I don’t think you want to be sending them money in 5 years for the all the cards that weren’t redeemed.