The Revenue Classification is declared when adding Categories and Products in the Catalogue, as follows:
Add a new Product Category to your catalogue or edit an existing one, as shown here.
At the bottom of the screen, you will find the field labeled “Revenue Classification Category Code.”
When you click the downward arrow, three different options will appear:
a) Merchandise, b) Product, c) Service
To determine the appropriate Revenue Classification for each category, consult your accountant.
When you assign a Revenue Classification to a Category, it is automatically applied to all the products contained within that Category.
If one or more products within a Product Category do not correspond to the Revenue Classification of the rest of the category, you have the option to override the general classification and change it according to the specifications of the individual product.
Go to the existing product or create a new product.
If you want to edit an existing product, click the pencil icon at the bottom left.
At the bottom of the screen, you will see a box labeled “Override Category Classification.” Tick the checkbox next to it and select the new classification that applies to the specific product.
But what does “Revenue Classification” mean?
Essentially, it means that every income a business receives must be categorized based on its source. The main types relevant to Butler users are:
Retail Sale: Selling products directly to consumers.
Service Provision: Offering services to customers.
Wholesale Sale: Selling products to other businesses.
Why is revenue classification mandatory?
Legal Compliance: Declaring revenue classification is mandatory for all businesses under the AADE digital books legislation. Non-compliance may result in penalties.
Automatic Update of Accounting Records: With correct revenue classification, your business’s accounting records are automatically and accurately updated, simplifying the process and reducing errors.
Transparency and Control: Revenue classification allows the AADE to cross-check business data, ensuring tax transparency and preventing tax evasion.
Accurate Filing of Returns: Proper categorization of revenue makes it easier to correctly file periodic VAT and income tax returns.