How do I properly account for promotional product giveaways?

Shopify Discussion
1

What’s the best way to account for products I give away as promos? For example, let’s say I have 100 t-shirts for sale on my website that are being tracked using Shopify’s inventory system. But I want to use a few of them, wear them in photo shoots, give them away to friends, etc.

How do I account for that usage to deplete the inventory count but also keep track of who has received free t-shirts? Would the best way to create an order in Shopify for the “customer” (ie my friend) and discount the product to $0?

Also, if I use a shirt, how do I account for that? My first thought is to add myself as a customer and create $0 orders to accurately deplete inventory for each shirt I use.

Another idea is to create a blanket customer called “Promotions and Giveaways” and create $0 orders under this customer for all of the products I giveaway. Only issue here is I won’t be able to track which of my real customers have received a free product.

Any ideas?

2

Hi @TownandTrail

Any of the options you mention will work. We typically use the first option, where we create an order under the customer’s name and discount it 100%. All depends on how you want to do your books! Not sure if you’re U.S. - based, but if you are you may also want to ask a CPA about it. Some state tax laws require sales tax to be paid by the business on give-away items, and inventory that is taken out for personal use.

1 Like
3

Thanks @BobsMojo , appreciate the insight. Yes, US based so will chat with our CPA about the impact to sales tax. Thanks again!

4

If you are in a state that requires sales tax to be paid on promotions/ giveaways what is the best way to recorder the transaction, remove the item from inventory and allow the bookkeeper to run a report for these transactions at the end of the year?