Creating discount items

A discount item applies a discount (either a percentage or a fixed amount) to the preceding line on a sales form.

You do not need a discount item for discounts you give for early payment. You can calculate these discounts when you receive payments from customers.

To create discount items:

  1. Choose Lists > Items.
  2. Click the + at the bottom of the list.
    Add
  3. In the Type field of the New Item window, choose Discount.
  4. Enter an item name, such as “Discount.”
  5. Enter the description that you want QuickBooks to put on your sales forms when you apply the discount.
  6. Enter the discount amount or percentage:
    • If the discount is a percentage, include a % sign. For example, 5% tells QuickBooks to multiply the previous line by .05.
    • If your discount amounts vary, you may want to leave the Amount field blank and enter the amount directly on your sales forms.
  7. Enter the account you use to track discounts you give to customers. You can use either an expense account or an income account. When an income account tracks discounts on sales, the account is often called a “contra-income” account.
  8. Indicate whether you want this discount to reduce sales tax when you apply it to a sale:
    • To reduce the tax, select the “Apply discount before sales tax” checkbox. This causes QuickBooks to include the discount when it calculates tax on a sale.
    • To keep the tax the same, clear the “Apply discount before sales tax” checkbox. This causes QuickBooks to exclude the discount when it calculates tax on a sale.