Introducing new products and services to your business is a real opportunity for growth, but accounting for these new ventures can seem somewhat overwhelming. Depending on the LoyLap software you’re subscribing to, the way in which you calculate and collect tax must be considered.
When a customer purchases a gift card, the denomination of the card is sold upfront, with the tax realised upon redemption. Because the purchases you make with the gift card will be taxed, if you were to charge sales tax on the value of the cards when sold, technically, the sales tax would be paid twice.
Whether it be stamp or credit back, customers can earn and redeem loyalty based on specific purchases by category or product, total basket spend, or even visits to your establishment. The customer accumulates a balance on their loyalty card or account, which can then be used towards a future purchase. Future purchases are discounted to zero, and are generally non-taxable as it is given away for free.
Online ordering for collection or table service requires that tax be paid directly on the order. However, depending on the country, state, province or city, the value-added tax (VAT), or goods and services tax, can be calculated differently based on whether you’re dining in or taking away. To avoid any confusion, it’s best to ensure the products in your POS inventory are marked appropriately, based on the sales tax to be applied to your region.
Disclaimer: This article is not to be taken as legal or general accounting advice. Instruction should be sought directly from professionals in your County/State who will be more familiar with your exact accounting laws. This article is designed as a guide only, to better understand LoyLap's services, and how they are generally interpreted for accounting purposes.