How to Handle Rebates in QuickBooks
By Jeff Grundy
Rebates can help your business to both increase sales and save money. If you offer your customers rebates on products, they are more likely to buy. Also, taking advantage of rebates offered by your vendors can save your business money. Since you pay or receive a rebate amount after the initial transaction involved, you must update your books to reflect the income or expense related to the rebate. With QuickBooks, entering payments or income associated with a rebate is relatively straightforward.
Rebates from Vendors
Click "Banking" and then select "Make Deposits."
Select any additional payments you want to include with the rebate deposit when the "Payments to Deposit" window opens.
Click the "Deposit To" drop-down list and select the account to which you want to deposit the rebate (i.e. Bank Account.)
Click the "Received From" column on a blank line, and then type the name of the vendor from whom you received the rebate.
Click the "Income" column on the same line and select the expense account used to record the original vendor invoice.
Enter a descriptive memo for the rebate transaction in the "Memo" column. Enter "rebate for special purchase," "rebate for invoice number ###" or something similar.
Enter the check number in the "Chk No." column if the vendor issued a check for the rebate. Select the appropriate payment method in the "Pmt Meth." column and enter the rebate amount in the "Amount" column.
Click the "Save & Close" button to save the rebate entry and record the deposit.
Create Account for Customer Rebates
Click "Lists" and then select "Chart of Accounts."
Click "Account" and then click "New."
Select "Income" as the account type and enter a unique account number such as "99999" or some other value not used by another QuickBooks account. Enter "Rebates" or something similar as the account name, and then click "OK."
Create Rebate Item
Click "Lists" and then select "Items."
Click the "Item" button and select "New." Click the "Type" drop-down list and select "Other Charge." Enter "Customer Rebates" as the name and select the "Rebates" in the Account drop-down list.
Clear the text in the "Tax Code" field and leave the Amount field as "$0.00." Click the "OK" button.
Create a Customer Rebate
Click "Customers" and then choose "Create Credit Memos/Refunds."
Select the name of the customer receiving the rebate in the "Customer:Job" drop-down list.
Click the "Item" drop-down list and select the "Rebate" item. Enter a description of the rebate transaction or a tracking number if applicable.
Click "Edit" on the menu bar, and then select "Mark Credit Memo Pending." Click "Save & Close" to record the new rebate entry and close the form.
Redeem a Customer Rebate
Click "Customers" and then click "Create Credit Memos/Refunds." Click the "Back" button in the Credit Memo window until the pending credit memo for the rebate displays on the screen.
Click "Edit," and then select "Final." Click "Save & Close" to display the Available Credit window.
Select "Give a refund" and click "OK." The Issue a Refund window opens with all of the relevant fields pre-populated.
Enter the check number for the rebate check or select "Cash" as the payment type. Click the "OK" button and issue the rebate to the customer.
In most cases, rebates have expiration dates. Therefore, you may want to include in a note in the Memo field of the Credit Memo that reads "Expires in 30 days" or something similar, so that you can ensure the customer redeems the rebate in a timely manner.
Information in this article applies to QuickBooks 2102 and 2013. Procedures may vary with other versions.
- Intuit QuickBooks Support: Record a Deposit and Refund From a Vendor for a Bill Already Paid
- Intuit QuickBooks Support: Creating Customer Rebates
- Intuit QuickBooks Support: Creating a "Pending" Credit Memo
- Intuit QuickBooks Support: Enter a Credit Memo or Record a Return
- Intuit QuickBooks Online: Applying a Credit Memo, Credit or Refund for a Customer
- SMT & Associates: Customer Refunds- Are You Doing Them Right in QuickBooks?
Jeff Grundy has been writing computer-related articles and tutorials since 1995. Since that time, Grundy has written many guides to using various applications that are published on numerous how-to and tutorial sites. Born and raised in South Georgia, Grundy holds a Master of Science degree in mathematics from the Georgia Institute of Technology.