Which subject does the sponsorship fee received by the enterprise include? Additional accounting entries

Sponsorship expenses incurred by enterprises are generally included in non-operating expenditure accounts. So what subjects do you have to pass to collect sponsorship fees? How to make accounting entries?

What subjects does the sponsorship fee pass?

It has little to do with the daily production and business activities of enterprises to collect sponsorship fees and take non-operating income subjects.

Non-operating income refers to all kinds of income that are not directly related to the production and business activities of enterprises. Non-operating income is actually a kind of net income, which does not need to be paid by enterprises or matched with related expenses. Therefore, in accounting, we should strictly distinguish between non-operating income and non-operating income. Generally speaking, all income except the main business and other affiliated businesses stated in the business license of an enterprise is non-operating income.

Accounting entries for sponsorship fees received

Debit: bank deposit

Loan: non-operating income

Accounting entries for sponsorship fees

The external sponsorship fee of an enterprise cannot be included in the legal cost of the enterprise. The general practice is to include non-operating expenses and increase the taxable income (sponsorship fee) when the annual income tax is settled. The accounting treatment of sponsorship expenses is as follows:

Borrow: non-operating expenses

Credit: cash on hand/bank deposit.

Non-operating expenses refer to all non-operating expenses except the main business cost and other business expenses. Such as fines, donations, extraordinary losses, fixed assets inventory losses, etc.

Do I have to pay VAT for the sponsorship fee?

According to Article 1 of the Provisional Regulations on Value-added Tax, units and individuals that sell goods or process, repair and repair services (hereinafter referred to as services), services, intangible assets, real estate and imported goods in People's Republic of China (PRC) are taxpayers of value-added tax and shall pay value-added tax in accordance with these regulations.

Whether all kinds of sponsorship fees received by enterprises need to pay VAT depends on whether the sponsorship fees obtained by enterprises belong to taxable sales activities.

1. If it is only the sponsorship fee, that is, there is no taxable sales behavior, then it is obtained free of charge, which is not within the taxable scope of VAT, and VAT and invoices do not need to be paid.

2. If it is exhibition service, advertising, etc. In the name of sponsorship fee, it is taxable sales, and the paid income is within the taxable scope of value-added tax, and the corresponding value-added tax should be paid according to the regulations.

3. It should be noted that if the sponsorship provided by the sponsor is in kind, not in cash, then the tax treatment of the sponsor will be treated as sales, but whether the recipient needs to pay VAT will be treated according to the above principles.