Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
jmdooley9
New Member

How to categorize print credits in a photography business

Some photography packages purchased by my clients include "print credits" that they can use towards a print order (similar to a gift card)*. When they place an print order, they use these print credits to cover some (or all) of their purchase. Do I categorize these print credits as a business expense? How would I categorize them?
*Ex: Photography Package A is $200 and includes a $25 print credit. Client purchases this package and later makes a $50 purchase when ordering prints, and uses their $25 print credit to cover part of the cost.
1 Best answer

Accepted Solutions
MinhT
Expert Alumni

How to categorize print credits in a photography business

I assume that you use the cash method like a vast majority of self-employed people and small businesses.

The print credits are not exactly a business expense. They are a discount on future business. When your clients redeem these print credits, they will pay a reduced amount for their new order. You just report the net amount (after print credits) as income. In fact, print credits are not a business expense, but a reduction in income when they are redeemed.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

2 Replies
MinhT
Expert Alumni

How to categorize print credits in a photography business

I assume that you use the cash method like a vast majority of self-employed people and small businesses.

The print credits are not exactly a business expense. They are a discount on future business. When your clients redeem these print credits, they will pay a reduced amount for their new order. You just report the net amount (after print credits) as income. In fact, print credits are not a business expense, but a reduction in income when they are redeemed.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

jmdooley9
New Member

How to categorize print credits in a photography business

Thanks! Since I pay sales tax on the pre-print credit amount, I was worried about my reported income for my state sales tax not lining up with my reported income for federal income purposes. But this makes sense.
Dynamic AdsDynamic Ads
Privacy Settings
v