How Can Putting Your Logo On A Wine Bottle Save You Tax Dollars This Year?
catherine | The Watercooler | Thursday December 19 2013And 7 Other Great Tax Savers Uncorked.
Are You In A Giving Mood This Year? Put Your Logo On It For Possible 100% Deduction.
Typically there are two types of gifts you can give that can be written off 100% and are not taxable. An example of these gifts would be Thanksgiving turkey, a Bottle Of Wine, Flowers, or even entertainment tickets to a show or game for your employees. One of the features of these gifts, under IRS interpretation, is that they are nominal in value and are given infrequently. The other type of gifts include those you give out to your clients. Now the deal is, and you want to be very careful, you can only claim $25 per person in a given calendar year. After that, the expense is not allowable. Unless your gift has your company logo on it. Then it’s actually a promotional item and the rules change! Want more? Keep reading…
When Does Your Generosity As A Business Owner Become A Tax Haven?
One way that a lot of business owners miss opportunities to save tax dollars is failing to record their charitable contributions. I’m not talking about the annual gift to charity. I’m talking about all of it. When you’re active in your community you’re probably being asked for and responding to charitable requests all the time. You need to keep track of ALL OF THESE. Since these expenses are 100% deductible you can save more money. (It’s what we bookkeepers and virtual assistants help you with) The reason is…there is AN IRS THRESSHOLD. And, if you surpass that threshold, you can itemize these deductions and save even more tax dollars this year.
Do You Know Which Type Of Meals Are 100% Tax Deductible?
There are two different ways that your meals are recognized by the government – 100% and 50%. If you go have a meeting over a meal as a promotional opportunity, then it would be taxed at 50%. This means that you talk about business but essentially you are entertaining or paying for the food/meal. You still need to answer who, what, where, when for the expense to not be questioned by the IRS. If you are traveling for business, you have to eat. This would be taxed at 100%. With all things IRS, there is also the grey area 100% deduction in special instances, like a holiday party for employees or instances where you supply lunch for the office. When we are working with a client, we help them plan and track all of the info regarding this. Invariably we’ll find some savings just because the records are kept up better.
The Envelope Says…. “You Save Money!”
One of the nasty tasks we take off of our clients To Do pile is tracking all the cash receipts. You know, there are always those times when we all pull cash from the ATM for whatever reason. The thing that we all forget to do is keep track of that cash. So what we suggest is to keep a small envelope in your car, purse, jacket, or your office bag and throw all those cash receipts along with the ATM receipts into the envelope. Some of my clients just write out some notes and send them to us. We categorize it and review it with them. You see, when you pool all those receipts together, we find all kinds of real expenses that otherwise get missed and cost you needless loss. Why pay taxes on what you can rightfully deduct?
The Tax Man’s “Make Money From Home” program.
If you ever work from home, you should really establish a home office. The rules for the deduction are really simple. You’ll need to know your full home square footage to report to your accountant. Take a picture of your designated office area (a kitchen table does not count). Measure the square footage of the space you are using. You can deduct a portion of your utilities, cleaning fees, rent/mortgage and repairs/maintenance to your home. It’s amazing and it really does add up to a big savings. Ask your CPA, you have to do it right.
Did You Have A Good Year? Buy Something Big And Pay Less Tax For Years…
Buy that big piece of equipment. Let’s say your profit & loss (also known as an income statement) is showing a really large profit. You don’t want to pay a hefty tax so now is the time to purchase a large piece of equipment. That could mean a brand new computer set-up, a new piece of office furniture, etc. These items would be considered fixed assets, which add to the company’s overall value, and depreciate over time – expenses that apply over a 3-year up to 20-year period.
Deny, Deny, Deny Is Not A Good Strategy, Defer, Defer, Defer is…
As a small business owner, you want to defer the amount of taxes you pay. A great way to do this is to put money into a retirement account. By placing the funds into the account, you reduce the amount of taxes you have to pay the IRS and increase your overall personal wealth.
Don’t Sweat The IRS, They May Owe You Money.
I can’t tell you how many times someone will get a notice from the IRS. Usually this has to do with something you did not report to the IRS for whatever reason. The best example I have is a situation I heard from one of the many accountants I know and work with. A woman whose husband passed away cashed in some stocks to cover personal costs. She received a notice that she owed approximately $20,000 because she did not claim the sale on her taxes. Well, it turned out that she paid more money for the stocks than the cost of what they were sold. The difference was not significant but she ended up getting a refund from IRS because she incurred the loss on the sale of the stocks. So as you can see, don’t just assume the IRS is 100% correct. Take the information to an accountant, review all the details surrounding the issue and then you can make a proper assessment of what needs to be done.
Our job here at The Office Grapevine is to save our clients Time, Energy And Money. If you have any other great tips, leave a comment and share this with your friends.
How Can Putting Your Logo On A Wine Bottle Save You Tax Dollars This Year? ,
I glanced at it just now and the business meals scenario seems to be backwards. In the wine business if you are having a meal where you are educating your customer on your wines, that would be 100% deductible and travel meals would be 50%.
I would somewhat disagree with the statement “Buy that big piece of equipment”; this approach would not reduce the current year’s P and L, I would prefer to pull some needed expenses for next year forward into the current year. Office supplies, Tasting room supplies, packaging materials, propane, and low cost office furniture (I do CAPEX at the $1,000 threshold). I am not a fan of depreciation, it sticks with you for years. I try an expense most things as cash flow permits.
Hi Leo,
I agree that in the wine industry it would follow that the education process would be 100%. In theory though, isn’t this actually an education event rather than a meal? For wine folks to truly educate, they do need to show how wines and food pair together well or not so well.
I completely understand how you would want to capture the full depreciation on large purchases. For a smaller company though, being able to amortize the depreciation may make more sense depending on their tax situation.
I would consider most of these items guidelines that are extremely good for the small and medium business to utilize while working in conjunction with their accountant to maximize the best tax benefit.
Enjoyed reading your blog, you have some good tips. The office in home deduction has been made even easier for some, with a flat deduction that doesn’t require you to depreciate the business percent of your home, and you can take 100 percent of your mortgage interest and real estate taxes off on schedule A.
I found it very interesting and insightful. Definitely helpful for people to consider/think of.