I own a computer software development company and we also provide web hosting services for our clients. We recently donated a years worth of hosting services to three churches and I was wondering how best to record this in our accounting system? I started by creating an invoice with a line item for the year of hosting services and another line item noting a donation of the same amount producing a zero balance invoice. In the end, however, that creates both a sale and donation against that sale and they negate each other. Is this the proper way to record donation of services to a charitable organization or is there a way to enter the donation without the sale to receive a tax benefit for the donation?

Thanks in advance,
Brian

You are not making a sale. The conditions of recording a sale is a) goods are delivered or services are performed, which this qualifies. b) payment is reasonable secured, which is not your situation, you are not expecting to be paid.

For your tax benefits, have the organizations get you some paperwork that the IRS accepts. There are regulations specified in the IRS website under Charities and Non-profit. Generally only expense incurred or paid out-of-pocket are tax deductable.