How does Batteries Plus Bulbs account for sales tax collected from customers?

According to the 2025 Batteries Plus Bulbs Franchise Disclosure Document, Batteries Plus Bulbs and Ascent collect sales tax from certain customers and remit the entire amount to the appropriate governmental entities. The accounting policy of Batteries Plus Bulbs is to exclude the tax collected and remitted from both merchandise sales and the cost of merchandise sold.

For a prospective franchisee, this means that the sales tax collected from customers does not appear as part of the revenue or expenses on the income statement. Batteries Plus Bulbs acts as a collection agent for the government, and the sales tax amounts are simply passed through without affecting the company's reported sales or cost of goods sold. This is a common practice in franchising and retail businesses, as it provides a clearer picture of the company's actual sales performance and profitability.

This accounting treatment ensures that the financial statements accurately reflect the company's operational performance, without distortion from sales tax amounts. Franchisees can focus on the reported sales figures as a true representation of their revenue generation, without needing to factor in the pass-through sales tax amounts. This approach simplifies financial analysis and provides a more transparent view of the business's financial health.