How to 'account' for raffle gift donated at Craft Fair?

[designer187]

Wondered if anyone could answer a simple question or two about accounts...

Last couple of fairs I've been to have asked for a donation for their raffle stall, and 'expect' it to be a sample of the craft you are selling. My question is how do you account for this in terms of book-keeping? It isn't a sale because no money has been paid for it, but I now have one item less to sell that needs to be accounted for.

The other question is along similar lines, if I decide to give my own product as a gift to a friend or family, should I effectively 'buy' the item from myself, or does it get recorded somehow as a loss?

I've been keeping my own records for years but have only started doing craft type fairs recently.

Thanks in advance for any help that's out there

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Accounts are for monetary transactions, that is what they record. Stock items are recorded by their monetary value, not their quantities. Once a year the value of the stock should be calculated as this enters the profit and loss of the business as an asset of the business.

I expect you are buying various items to make your item or technically buying in bulk for assembly into an item to be sold individually.

There is no record of exactly what goes into one item eg a piece of jewellry might have beads from several sources, thread from a reel from another source, the findings from somewhere else. In all business there is always a certain amount of stock that gets stolen, goes out of date, reduced as it sell slowly, or is totally dead that no one will buy. This has always been the case and a donation to a raffle falls within this category.

The gift to a friend or family is slightly different, but most people would usually pay a token amount to cover the material cost of the item, but not the time for making it. I did say most, but others would write a gift down as a form of advertising and not pay anything.

Hope this helps.

Roger

[designer187]

Thanks Roger

This does help, although how to I record the offset of the 'dead' stock or stock I have donated as raffle? I still need to show it some how on the books, if I have bought enough stock to make say 10 items and my books only show I have sold 9 but my stock take doesn't record the 10th item then surely I need to record it somewhere as a loss?

It sounds to me like the simplest way is to record the donation as advertising too? I pose the next question - do I record just the cost to make the product or the retail value I would normally sell it at?

Mmmm....

[Critchley]

Just mark it up as loss through damage/theft/whatever.

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Most people would just do an "error" in counting the stock at the next stock taking. In reality you are counting what stock is in hand at that time, so if it has been given away it cannot be counted.

Roger

[AnnieAnna]

They always joke people have two sets of books. You sort of really do.

The tax man will want to know how much money you got in and you'll want to tell him how much you spent out. He'll ask for broad categories and not care about the detail.

For yourself you will need to know, or will get curious about, whether you are spending your money wisely and whether your selling prices are sensible so you will want to keep track of the little things.

For yourself...... you could make a category called Raffle Prizes or you could add the cost of the raffle prize to the cost of the table or stick it under Advertising or Micellaneous.

If you or family members raid your 'shop', I believe the done thing is to charge them the cost of materials. This will probably be only numbers on paper as your family will not think of giving you any money especially if they are your children. I would do something similar for the raffle prizes.

With your accountant's hat on putting the raffle prizes in an loss/theft/damaged/gone with the wind category means it's a loss and you'll pay less tax.
Under Advertising or Miscellaneous or Pitch Costs it'll be the same. It's an expenditure and you'll pay less tax.
If you in effect buy it off yourself at cost then sell it back to yourself to use as the above your figures will come out neutral. It won't effect your tax bill one way or another.
If you account for the prizes at their selling prices it will look like you've made a profit on the sale and you will pay tax on that. (Unless you mark them down as out at the selling price, in which case you be back to neutral.)

So that's why the canny people are saying mark it down as a loss.

[nattynetty]

I think in the past I've put raffle prizes down as stall fees (if it's a requirement of having a stall) or advertising if it's a request from a local school/organisation. And I've always recorded them at cost price not retail.

[designer187]

Thanks everyone for your help. All I need to do now is get around to doing my bookkeeping monthly instead of at the end of my tax year!

The few fairs I've been to so far haven't given out receipts for the table fees, I guess I just have to keep my own records for this but I have no proof unless I have paid by cheque.

[nattynetty]

The few fairs I've been to so far haven't given out receipts for the table fees, I guess I just have to keep my own records for this but I have no proof unless I have paid by cheque.

In future do ask for a receipt, don't feel like you're being a pain - you're a business and the organisers should appreciate that.

And good luck with bookkeeping monthly, I've been in business for 7 years and I still find myself doing most of it at the end of the year...and every year I swear I'm going to be more organised

[Angi]

This has been a very helpful thread as I just did my first craft fair yesterday where I had to pay for a table and donate a raffle prize too so thank you :-)

[designer187]

I did ask at the last fair for a receipt and I would have presumed that all the other tables were running 'businesses' too so I find it strange they never came back to me with a receipt. I'll be more persistent tomorrow!

Love this site for all useful info & advice, thanks.

@Angie, I hope you had a successful first fair?

[Angi]

@Angie, I hope you had a successful first fair?

Thanks for asking - I didnt do as well as I hoped but as it was my first fair my expectations were maybe a little too high - good experience though but not sure its the right outlet for me. I have a stall at a dog agility show tomorrow (my target audience is dog owners) so fingers crossed this will be more productive. And its great as they dont charge me anything and I dont have to donate anything - though I always give 10% of my takings to Springer Rescue for Scotland.