Advertising, marketing and promotion costs to bring in new customers and keep existing ones are valuable tax deductible business expenses, that allow small businesses to save money on their taxes.
The Internal Revenue Service (IRS) states that advertising and marketing must be ordinary and necessary to be tax deductible.
They classify this as follows:
- An ordinary expense is one that is common and accepted in the industry.
- A necessary expense is one that is helpful and appropriate for the trade or business. An expense does not have to be indispensable to be considered necessary.
Examples of what you could claim for:
- Reasonable advertising expenses that are directly related to the business activities.
- An expense for the cost of institutional or goodwill advertising to keep the business name before the public if it relates to a reasonable expectation to gain business in the future. For example, the cost of advertising that encourages people to contribute to the Red Cross or to participate in similar causes is usually deductible.
- The cost of providing meals, entertainment, or recreational facilities to the public as a means of advertising or promoting goodwill in the community.
What isn’t tax deductible
Generally, small businesses won’t be able to deduct amounts they pay to influence legislation.
See how TaxAssist Advisors, can help you with a free, no obligation consultation. Contact us today on 888 547 9295 or fill out our online enquiry form here.
Date published Nov 26, 2021 | Last updated Nov 26, 2021This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
Sign up for our newsletter
Receive important tax news suitable for business owners and self-employed professionals.
Choose the right accounting firm for you
Running your own business can be challenging so why not let TaxAssist Advisors manage your tax, accounting, bookkeeping and payroll needs? If you are not receiving the service you deserve from your accountant, then perhaps it’s time to make the switch?
We specialize in supporting independent businesses and work with over 188 clients. Each TaxAssist Advisor runs their own business, and are passionate about supporting you.
We enjoy talking to business owners and self-employed professionals who are looking to get the most out of their accounting firm. You can visit us at any of our locations, meet with us online through video call software, or talk to us by telephone.
Changing accounting firm is easier than you might think. There are no tax implications and you can switch at any time in the year and our team will guide you through the process for a smooth transition.