I keep the books for a California hair salon that serves free drinks to its customers. How do I record the cost of the drinks that are purchased?
submitted by Dan Russell

swanrohnson

Not financial advise, of course, but you should record the cost of the free drinks as a business expense under an account like "Client Hospitality Expense," or something similar. Also, since these are provided for customer service rather than being sold, they are fully deductible as an advertising or promotional expense.

_im_rick_james_

The cost can be recorded as a promotional expense, like "Client Hospitality Expense." It's considered a marketing expense to attract and retain customers. Make sure to keep detailed records of these purchases for tax purposes.

By the way, what kind of drinks do you serve at a hair salon?

schmedry008

You can record the cost of the free drinks as "customer refreshments." It's a business expense, similar to any promotional thing, like printing a sign to hang in the window.

As long as you're not charging for the drinks, they won't need to be considered income. Just keep your receipts! Do everything like the IRS auditor is standing right behind you.

Art the Great

This must be a pretty unique hair cutting experience.