Tax Tips for Writing Off Your Holiday Party
‘Tis the season of giving and spreading festive cheer! Unfortunately, ‘tis also the season of extra strain on your wallet.
But fear not fellow merrymakers! In today’s blog post we’ll be sharing a few quick tips that will help you keep more of your hard-earned cash if you’re throwing a holiday party for your small business this year. It’s our Christmas gift to all of you hardworking entrepreneurs out there!
Here’s What You Need To Know…
Most savvy entrepreneurs know that you can deduct up to 50% of business-related meal and entertainment expenses. So if you decide to take your client out for dinner or to watch a hockey game, for example, half of the cost can be deducted from your business income (just remember to keep your receipt).
What many people don’t realize is there’s actually a special exception that allows you to deduct 100% of the cost of meals and entertainment when they’re provided for staff parties or functions.
There are a few stipulations though. Here are four things to keep in mind if you want to stay on the right side of the taxman:
- The party must be for employees.
A holiday get-together for clients and business associates isn’t a valid deductible expense.
- All staff must be invited.
Throwing a party for upper management and supervisors won’t cut it either. Everyone must be included.
- There’s a max of up to six staff functions per year.
Who doesn’t love a good party or two or six? But don’t try to claim deductions on more than that. Seven or more staff functions in any given year is a no-no.
- Document everything!
Keeping all your receipts for party expenses should be a no-brainer. But it’s also not a bad idea to keep a list of attendees and maybe even a few pictures or videos of the holiday soirée so you can legitimize your deductions if it comes time for an audit.
We hope these tax tips will help you avoid becoming a penny-pinching Scrooge when it comes to throwing a holiday party for your staff. And as always, if you have any questions or need an extra hand keeping your business in black the Blue Sky team is always here to help.
Give us a call, we’d love to chat about your small business: 289-466-5210