How to categorise a sponsorship payment?

Accounting
1

I’m going through the list of categories but can’t see one for sponsorship. Which category should I choose or should I create a new one?

2

Do you have one for donations you could amend or use?

3

I would open a new expense account for it. It might also help to know that there is sponsorship, and there is sponsorship! The starting rule of any expense of a business is that it must be “wholly and exclusively for the purposes of the trade”. So ask yourself if the sponsoring you are doing meets this requirement.

There are specific rules if the sponsorship is for charity too. Here’s what HMRC have to say: https://www.gov.uk/tax-limited-company-gives-to-charity/sponsoring-a-charity

4

The sponsorship is in return of advertising and promotion of the business and in turn am helping to fund a community cricket club’s maintenance fees for the year. The organization isn’t a charity. I currently have this filed under general purchase but it isn’t really a purchase per se.

5

Just checked and the explanation under “Donations” is to be used for charitable donations and this isn’t a charity.

6

You’ve got a choice of Marketing or Advertising then by the sound of it.

1 Like
7

We paid for carol sheets for a community group last Christmas. They carried our branding so we put them down as “advertising”.

1 Like
8

thanks!I have now gone with marketing for this one

9

Thank you - I think Advertising or Marketing works in this sense then. The organisation is also placing our logo on their web site and promotional material so we are getting exposure that way

10

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