Business Entertainment means typical and ordinary business entertainment like an occasional meal, ticket for a musical performance or show, or similar entertainment, as long as it’s neither so regular nor so exclusive that it raises many ethical questions for either the person giving the business Entertainment or for the recipients of it. In most cases, business Entertainment would consist of the many things usually associated with running a small business, like meeting clients and prospects, conducting business meetings, and the like. But in some cases, where business and pleasure may clash, it becomes necessary to find other ways to keep the business going. Entertainers are often needed to provide that extra bit of entertainment that can help make the business function smoothly. When and where entertainment is needed, no one could blame an employer for needing to find someone reliable and capable to keep the business going. And in case your business has any employees, they are sure to appreciate a good show, a funny trick, or an attractive woman at their side.
So how does one run an entertainment-cost effective workplace? First, determine how much you plan to spend on entertainment each week and factor that into your annual budget. Second, figure out how many meals you’ll need to cook for your employees per week and set up a schedule for breakfasts, lunches, and so on. Third, decide which types of entertainment will fit your business the best and arrange for them accordingly. Fourth, collect the entertainment costs and compile them into a cost estimate.
The standard deduction for business owners is the portion of their gross income that comes from the business. But to take it one step further, let’s say that you’re planning to hire a comedian to entertain your employees for the week. You’ll have to add your business entertainment expense to your regular income tax deductions. You may also want to deduct fifty percent of the total bill from your business mortgage if you use your home for your business.
There are several other types of business entertainment expenses you can use for your tax deduction. The first is any tickets or supplies for a professional sports event. You may be able to deduct fifty percent of the fees for advertising a concert or trade show, even if the concert or trade show is being held outside the United States. And if you were entertaining business clients with meals or beverages, you can deduct up to 50 percent of those expenses.
Another great way to save on business expenses is to include any meal expenses in your business discussion. The tax code allows you to claim a business expense for any activity that provides amusement, relaxation, or socialization as long as two of the following conditions are met: the activity is voluntary and in relation to the business and the people involved in the activity have no minimum age to participate. Minimum age requirements vary from country to country but usually are twenty-one or twenty-five years old. However, meal expenses are not always deductible as leisurely meals, such as lunch or dinner, are sometimes considered entertainment and deductible business expenses.
Entertainment and meals, along with gasoline and insurance premiums and home repairs, are considered personal expenses in the United States tax law and are deductible business expenses. If you entertain clients with meals or refreshments and you meet the other requirements in the exceptions section below, you can claim a tax reduction of up to fifty percent. That is, if you entertain a client for two hours, you can claim a deduction of four hundred dollars.
The allowable expenses vary from year to year but are not limited. In general, the allowable expenses include transportation expenses, office supplies, postage, meals, entertainment and luncheons. Exclusions include certain professional services such as architecture, engineering, maintenance and administrative fees. Also, if your corporation is a partnership, the part of the partnership’s income that is subject to income tax cannot be deducted.
To learn more about the deductible and allowable expenses, contact a tax professional in your area or visit the IRS website. There, you will find a list of qualified tax professionals. You can also find the latest versions of the Tax Tipsbook and IRS publications that help you understand the IRS system better. These resources can also give you helpful information on what types of expenses are deductible and which are not.