Contact Us

What Qualifies As a Business Gift

What Qualifies As a Business Gift

It is beneficial to give gifts to loyal clients around the holidays for several reasons. Gifts are a great way to express appreciation to loyal customers, strengthen relationships, and function as a marketing tool. Business gifts can even qualify for a tax deduction. Learn what qualifies as a business gift on tax breaks and how to choose one that is satisfactory for your customer.

What Defines a Business Gift?

The Internal Revenue Service (IRS) claims a business gift as a present gifted during trade or business. Keep in mind that these gifts are limited to $25 per individual/customer if they work for government institutions, such as a municipality or the post office. This limitation does not apply to a non-government institution or business.

Gifts To Other Businesses

When companies exchange gifts in the name of business, spending limits do not apply. You can fully deduct a gift when presented to a company to enhance their business.

Cost To Make a Gift

Additional enhancements made to the gift are also tax deductible for businesses. For example, if you custom engrave a humidor for your client, you can write the cost of this process off.

Employee Gifts

Employee gifts have a separate slew of limitations but typically they are entirely tax deductible. Treating your employees well is beneficial to company culture and your tax deductions!

Entertainment Expenses

If you take a client to an event, like a concert or baseball game, it can be written off on your taxes as well. You can choose whether you want your entertainment purchase to be labeled as “gift” or “entertainment” come tax season. Entertainment expenses are usually only 50 percent deductible. It is financially savvy to mark “gift” for lower-priced costs, switching to “entertainment” when the total exceeds $50.

When finding a gift that is right for your client, consider Kustom Products. From custom humidor bundles to classy barware, you can acquire an ideal present that your client is sure to appreciate. Take advantage of the tax break that comes from being generous this holiday season and gift your well-deserving employees and customers. Your tax deductions will remind you that you made the right choice!

Leave a comment

Please note, comments must be approved before they are published