Accounting for Donations

AnthonyG

Hello,

I hope this is the correct category for my question.

How do I account for services rendered that were donated? We are working with a non-profit that provides free cleaning to cancer patients. We did the work and they will provide us with a donation receipt in the amount we would normally have charged.

Do I create an expense account titled, "Donations" or something similar? Do I create an invoice as well?

Any help would be appreciated.

Thanks,
Anthony

Mikeg

AnthonyG,
Unfortunately you cannot deduct the value of services provided. However, any business cost you incurred are still deductible. So for example, employee salaries who provided service, travel to and from, etc See IRS publication 526 page 7.

AnthonyG

Thanks, Mike

I'm really just trying to figure out how to account for the transaction.

Mikeg

@AnthonyG,
You would just continue normal accounting for the business. You do not try and record the charitable deduction for the fair market value of services.

AnthonyG

Thanks Mike,

So I don't need to record a transaction at all?

Mikeg

@AnthonyG,
I'm not sure how to answer that. Can you provide an example?

AnthonyG

My example was in my original post:

"We are working with a non-profit that provides free cleaning to cancer patients. We did the work and they will provide us with a donation receipt in the amount we would normally have charged."

My question is how do I account for this?

Please let me know if you need more details.

Mikeg

@AnthonyG,
You would account for your expenses as you normally would. You would not record any transactions to try and write off the value of cleanings. Hope that helps

AnthonyG

Ok, thanks. I'm not looking to write anything off. Just wondering how to account for the work done. Not sure how to go about only accounting for the expenses of the individual job. Like I mentioned may be best to not record a transaction at all then. Again, not sure, but thanks for your help.

Mikeg

That is why I was asking for some details to be able to give you an answer. What is meant by cleaning? What does your business do? What is it doing for the non profit? Be happy to assist.

AnthonyG

Ok, thanks. Starting over.

We have a house cleaning business, my girlfriend and I do the cleanings.

We partnered with a non-profit called "Cleaning For A Reason", they help cancer patients get free house cleanings.

We clean the cancer patient's home for free and "Cleaning For A Reason" supplies us with a "donation receipt" in the amount we would have normally charged for the cleaning. In this case, we would have normally charged $195. No money was exchanged. We provided the service and they will provide a "donation receipt" of some type, as this is our first time cleaning for them I'm not exactly sure yet, but I want to be able to account for it if necessary.

I hope that makes it more clear.

Thanks again.

Mikeg

@AnthonyG,
Yep, so you would be able to deduct the cost of cleaning supplies that you used, travel to the home and if you and your girlfriend are on salary (W-2 employee of your business) your salary. There is nothing additional you would record out of the ordinary course of your business.
And thanks for doing that. I'm sure that is a big help for the people you serve.

AnthonyG

Ok, so no need to record a transaction then?

Mikeg

That is correct

AnthonyG

Thanks for all the help

EmmaP

Awesome @Mikeg!