Tax deductions are a great way for you to lower your business tax bill. Deductions help offset the amount your business has to pay by taking into consideration the costs of doing business. There are many tax deductions available to businesses, and one of the largest categories of these deductions is marketing and advertising expenses.
Small business advertising and marketing costs may be tax deductible
IRS tax law allows businesses to deduct expenses that help them bring in new customers and keep existing ones. These costs include expenses for advertising and marketing. Here are some details about this valuable tax deduction that can help small businesses save money on their taxes.
Advertising and marketing costs must be ordinary and necessary to be tax deductible.
- An ordinary expense is one that is common and accepted in the industry.
- A necessary expense is one that is helpful and appropriate for the trade or business. An expense does not have to be indispensable to be considered necessary.
Here are a few advertising expenses that are usually deductible:
- Reasonable advertising expenses that are directly related to the business activities.
- An expense for the cost of institutional or goodwill advertising to keep the business name before the public if it relates to a reasonable expectation to gain business in the future. For example, the cost of advertising that encourages people to contribute to the Red Cross or to participate in similar causes is usually deductible.
Generally, small businesses can’t deduct amounts they pay to influence legislation, which includes advertising in a convention program of a political party, or in any other publication if any of the proceeds from the publication are for, or intended for, the use of a political party or candidate.
Mail South Jersey can help you reduce your tax liability, while bringing in new customers. That’s a win-win for local businesses, especially those that had a profitable year in 2022. For more information, call us at (856) 673-3277.