The weather is beautiful, the watermelon is sweet, and the fireworks are getting ready to fly. There’s never been a better time for a party! We all know that as business owners we can enjoy certain tax deductions for entertaining clients and employees, but did you know that we may be entitled to write-offs for hosting get-togethers at our own home?
By holding a “substantial business discussion” directly before or after the entertainment, the cost of the event qualifies for a tax deduction. Of course, with the IRS there are always caveats, and in this case the entertainment must be secondary to the business purpose. While you can certainly invite friends and neighbors, if they aren’t connected somehow with your business then you can’t write-off costs for those guests. But the good news is that you can count the spouses of those who are integral to the meeting.
How much can you deduct? Suppose you hold a party at your house following a substantial business discussion; the guest list includes three airport associates at the meeting and their spouses, two casual friends, you, and your spouse. If the total cost is $1,000, then only $800 of the cost qualifies for the deduction, allowing you to write off $400 as business entertainment (50 percent tax rule of $800).
Now suppose you decide to host a summer employee (team) meeting or airport update for your clients and other aviation associates right before your big backyard barbeque. The usual 50 percent limit on entertainment deductions doesn't apply. As long as you invite the entire staff, the entire cost is deductible. Make sure to check with your tax advisor or review IRS Publication 463 to make sure you’re following all the guidelines.
Here are 10 other lesser-known business deductions.
- ATM, credit card, and other bank fees on business accounts
- Office supplies, such as business cards, magazines, and books
- Membership fees in trade organizations
- Marketing lists
- Technology, such as computers, Internet access, and cell phone plans
- Staff training
- Mailing and postage
- Attendance at trade shows, such as AOPA Aviation Summit
- Maintenance of your facility, including cleaning services
- Costs associated with charitable flights
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