[Question] ACCOUNTING FOR PROMOTIONAL SALES

[CHERYL1962]

A company, non-VAT registered at the moment, performs free services for first time clients or gives away products.

1. How does one account for this in Pastel?
a) All stock purchased expensed on purchase.

b) What would be the vat implications upon registration, as one would claim the input on purchases?

Thanks

[Neville Bailey]

1. How does one account for this in Pastel?

If you are using inventory item codes (service or physical) for the billing of the services and/or products, then process the line items on the invoice in the usual manner, but capture a unit selling price of zero. If you are using physical item codes and you have inventory integrated to the general ledger, then the stock movement on the free sale will be accounted for, at cost.

If you are using general ledger codes for the billing, then simply capture the line items as usual but with a zero value.

[CLIVE-TRIANGLE]

A company, non-VAT registered at the moment, performs free services for first time clients or gives away products.

1. How does one account for this in Pastel?
a) All stock purchased expensed on purchase.

b) What would be the vat implications upon registration, as one would claim the input on purchases?

Thanks

Generally speaking, there is little point in registering for VAT. You can only claim input credits incurred in making taxable supplies. If you are not making these, then there is no point. Secondly, do your taxable supplies even exceed the minimum threshold?

If you have a mix, then you have to apportion your claim accordingly. I personally wouldn't want to be saddled with task.