u/brytheguy45

Interested in hearing how other bookkeepers for small businesses account for cash back rewards. Obviously you've got the debit to the checking account/credit card but what is your corresponding credit entry? The reason I ask is because cash back rewards are not taxable income so I'm hesitating on including it in the P&L as either income or a direct reduction of an expense. I worry that the business's tax accountant (I don't do the taxes) will not catch that the cash back rewards should not be included in income (should be an M-1 adjustment). Could it be appropriate to make the credit entry to equity as paid in capital?