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Accurate Gift Card Liability Reporting with Square & Bookkeep

Overview​

When selling gift cards through Square, it’s critical to maintain an accurate record of your gift card liability — the total value your business is obligated to honor in the future. Bookkeep’s Square accounting automation ensures this liability is fully and correctly captured, even in cases where gift cards are sold at a discount.

The Challenge with Square Sales Reports​

By default, Square’s sales summary reports reflect only the net amount paid for gift cards — meaning if a $100 gift card is sold for $90, the report will show $90 under gift card sales. This can lead to a significant understatement of your liability on the books, as your business is still responsible for the full $100 gift card value.

This behavior:

  • Creates a mismatch between gift card liabilities and actual outstanding balances.
  • Skews your financial reporting and accruals.
  • Misrepresents deferred revenue tied to gift cards.

How Bookkeep Solves This​

Bookkeep addresses this discrepancy by automating your accounting entries for gift cards in a way that reflects the full face value issued — not just what was paid.

Here's how it works:

  • Tracks all gift card sales through Square, including those sold at a discount.
  • Posts the full issued amount as a liability to your accounting platform (e.g., QuickBooks, Xero).
  • Separately recognizes any discounts as a promotional or marketing expense (if applicable).
  • Maintains a clean trail for every gift card sold.

Why It Matters​

Accurately tracking gift card liabilities is essential for:

  • Ensuring your balance sheet reflects all future obligations.
  • Having a true understanding of customer credit outstanding.

Example Scenario​

DescriptionAmount
Gift card face value$100
Discount applied$10
Customer paid$90

Square Sales Report shows: $90

Bookkeep records:

  • $100 to Gift Card Liability
  • $10 to Gift Card Discount Expense
  • $90 cash received

This ensures your accounting reflects the real gift card value outstanding, not just the amount paid.

Summary​

Bookkeep’s Square integration gives you a true and complete picture of your gift card liability, including discounts. This enables you to:

  • Stay compliant
  • Prevent accounting discrepancies
  • Make better business decisions with accurate data

If you have any questions, please contact support@bookkeep.com.