## 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

| Description                 | Amount  |
|-----------------------------|---------|
| 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](mailto:support@bookkeep.com).