Avoid These Costly Mistakes When it Comes to Business Gifts

Making gifts to promote your business may be complicated by time, inflation, and poor tax legislation. 

For Example:

Laura (a client) recently asked if they could write off the cost of sending $5 Starbucks gift cards to prospects and referral sources.

According to the law, this client’s $5 Starbucks cards will be treated as business gifts.

If she gives a card to a referral source every month, her cost is $60 for the year ($5 x 12), but she may not deduct more than $25 for business gifts made to the same person. Ouch!

There is a $4 exception to the gift rules that allows you to give an item as advertising to a customer or prospect.

  • That costs you $4 or less,
  • On which you have your name clearly and permanently imprinted, and
  • That is one of several identical items distributed generally by you.

This is absurd.

The $4 rule was enacted in 1962, years before Starbucks came into being. If you applied the consumer price index calculator to that $4 amount, it would inflate to $39 today.

Do you want to know a legal hack to avoid this rule?

 Book Your Tax Assessment here.