Making items used for a promotional purpose?

[woodtattoos]

Dear one and all,

I have a question/scenario to put to you all for some help and advice.

If you make an item which is used for a purely promotional purposes, i.e., you make it with the intention of it being given away free of charge so that your only return for it is advertising, publicity, etc, would it be appropriate to then add something in your account expenses as a cost for the time you spent making it, in addition to the obvious materials costs, etc?

I'd be interested to see what the best process is, hear what other people have done to tackle this in their own crafting, etc.

Thanks and all the best,

Si (remember me?)

[Jinx]

Hi Si

You're making these items for promotional purposes so it's marketing activity and I'd add in all your usual production cost to your accounts.

If you normally include your time in your accounts expenses then I would include it, if you don't I wouldn't. My theory would be your prices should cover costs including all your marketing activity. Might be worth a call to your accountant to check?

[woodtattoos]

My commission prices are usually based on materials costs plus time taken to burn the design, but I just wasn't sure where things stand on this matter.
Obviously I was not physically able to make other commissions whilst I was taking time to create the promotional piece... can't do two things at once!
I don't use an accountant so am conducting some online research first!

Si.

[Caroleecrafts]

I have made or bought items which I use as props or things made donated to a charity auction. I put all costs through my accounts under charity donation. With items as a give away, include costs as normal for materials and time as normal you just will not have an in receipt with profit. You could also have a section like Charity, as said it can also be marketing, when some companies give away pens etc. they account for them as paid for them. No different from advertising.

[woodtattoos]

I can understand the physical expenses of promotional items that you buy and 'give away', such as pens, postcards, business cards, etc... I just wasn't sure if I could allow for my crafting time... the item I made took a lot of hours, y'see...

[Caroleecrafts]

Of course you can after all an expense to you for which you will see no return. cost the item as normal including hours then put as a loss when donated

[craftdancer]

I can understand the physical expenses of promotional items that you buy and 'give away', such as pens, postcards, business cards, etc... I just wasn't sure if I could allow for my crafting time... the item I made took a lot of hours, y'see...

Logical brain coming into action!

Your time is a commodity, the same as materials, fuel etc. If you were employed by someone else and were making the same product for the same reason (ie promotional) you wouldn't expect your boss to say they wouldn't pay you for the time you spent doing it simply because the item will be free to the end user would you? Just because you're working for yourself it doesn't make your time valueless. Treat it the same as any item you make which will be exchanged for currency.

Linda

[3dDave]

Would you not sell the piece at the end of the promotion period?

Dave

[Caroleecrafts]

I think Si plans to give away at the end Dave

[3dDave]

Does He?, let's have a look,..de..de..dah...de..blimey, you are right, didn't read that one through did I? ...that's why I'm not in business, but they do let me loose on gas..so that's worrying. (Lol)

Dave.

[Caroleecrafts]

Lawd help us

[woodtattoos]

Yes, it was given away... to the lead singer of a rock band, and the exposure I've received as a result was mindblowing! I just wanted to make sure that I record it appropriately in my accounts, you see.

[Satchel]

Hi, unfortunately the hmrc rules for gifts, which this clearly is, state that costs can only be deducted if they are less than £50 and the item has a "conspicuous" advertisement for your business. Does your item fall into this range?

satchel.

[Caroleecrafts]

Hi, unfortunately the hmrc rules for gifts, which this clearly is, state that costs can only be deducted if they are less than £50 and the item has a "conspicuous" advertisement for your business. Does your item fall into this range?

satchel.

This refers to output vat.

Welcome to the forum Satchel, would be good if you could introduce yourself and tell us about what you craft, you seem to have a lot of suggestions on posts but we like to know who is giving this information

[Handmade Lives]

This stuff makes my head spin. You can see it all kinds of ways - are you saying that if a crafts-person spends hours making things that fail to sell they can still claim their work time ( which they received no income for) can that be put against their overall tax bill?) I can see that it is part of setting the right price for the work but not that its tax allowable.

You can pay yourself a salary and pay the tax on the salary but surely you can't have it both ways? Can sole traders really put time taken on unsuccessful products against tax? Reading other comments people seem to think that is normal practise.

What I am completely sure about is ask your tax office. Remarkably this is a brilliant free bit of tax efficient advice and when ever I wonder how to play a particular earning situation they have given me advice that has saved me so much money. You can ask without giving details, you can ask hypothetically. If the first line HMRC response don't know the answer they arrange for an expert in that field to ring you and they do and are truly helpful and take you though your options. Best not to ring at tax payment crunch time as they are under pressure then.