Bonuses paid to customers

Bonuses paid to customers are in some industries more common than in others. For instance where it’s often seen is with wholesale merchants and manufacturers. They drive on quantities since it gives them efficiency when we talk about manufacturing and better deals when we talk about companies who buy items in bulk to wholesale them further to stores for an example. In some industries it’s important to give your customers bonuses based on some predetermined conditions to keep your own business flourishing.

Customer bonuses are in essence benefits and discounts given to customers once they’ve met the targets which trigger bonuses to be paid. Usually those targets are defined volumes during a defined period (you’d define them with an agreement). They can of course be something else like ‘paying on time’ and ordering certain combination of goods and so on. That’s very dependent on your business and industry.

Matter of fact is that there are a couple of things you should watch out for with customer bonuses once you’ve decided to pay them. First off it’s important to understand that customer bonuses are always shown as a part of your sales revenue and in fact as decreasing your sales revenue. Customer bonuses are never shown as a part of your expenses; they ought to reflect that in essence you decrease what you earned.

Another aspect of customer bonuses are possible tax implications you should consider with your local legislation. Are there possibilities you could show the bonus paid as a part of your deductible expense on tax forms? That’s something I suggest you consult someone locally with.