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 £49.95 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 £49.95. This is classed as an expense.
The 49.95 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:
- £49.95 income (payment from member
- £49.95 expense (payment to Slimming World for the Gift Voucher)
- £XX.XX income (credited as a sundry from Slimming World depending on your retained earnings percentage).
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.