Staff Discounts


C

Cally

I'm doing the accounts for our own small business (Limited Company), we have
recently started selling products as well as services. Trouble is, we like
the stock so much we keep taking it! I think I could put it through as
'drawings', but I wanted to make a small profit on it, so I thought I'd use
a 25% Staff discount instead. Is this handled in the same way as 'cash
discounts' i.e. as an expense account the same as 'discounts allowed'?
If anyone can help I'd be very grateful...
cally
 
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C

Cally

Thank you for your help Jonathan, I see what you're getting at with the tax
on profit point, but I want hard cash to expand the stock lines and I want
to show a bit of profit on the 'shop' figures because it is in its' infancy
and I want a bit of credibility- should I need it. Does that make sense?
In fact, do I need to account for the discount anywhere other than for my
own analysis?
 
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T

Troy Steadman

I'm doing the accounts for our own small business (Limited Company), we have
recently started selling products as well as services. Trouble is, we like
the stock so much we keep taking it! I think I could put it through as
'drawings', but I wanted to make a small profit on it, so I thought I'd use
a 25% Staff discount instead. Is this handled in the same way as 'cash
discounts' i.e. as an expense account the same as 'discounts allowed'?
If anyone can help I'd be very grateful...
cally
Cally, Limited Companies don't "do" Drawings. If you are a Director you
have a Director's Loan account and if it gets overdrawn you have an
Tax issue. You have National Insurance and VAT issues to contend
with. If you want to retain your "street cred" do what Jonathan has
suggested and buy these things outside the company in the open market.


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