Most people are not aware that some of their advertising and marketing expenses are actually tax deductible and they might end up paying less taxes every year. This article will look at what types of expenses can be deducted and how you can claim them for your business.
The government allows you to deduct marketing expenses used to generate or keep customers. Advertising and marketing expenses qualify as an ordinary, reasonable, and necessary tax deduction. When done right and with professionals, marketing and advertising can have high ROI (Return on Investment). Marketing and advertising expenses aren’t a particularly tricky tax deduction as long as they are directly related to your business.
Below we will break down eight categories of marketing expenses that are tax deductible, also tell you which ones are not tax deductible, and what is considered marketing according to the IRS.
8 Common Marketing Expenses That Are Tax-Deductible:
Website Expenses:
Designing, developing, maintenance, updating, and cost for adding to a website are treated as normal business expenses and are deductible when incurred if these costs are truly maintenance type costs.
Marketing & Advertising Expenses:
Marketing expenses are defined as expenses that are directly related to the selling of a product, service, or brand. Your marketing spending categories might include printed publicity materials, newspaper advertising, the marketing team’s salaries, and the cost of Facebook ad’s, etc.
Consultant or Marketing Agency Retainer:
Any cost associated with hiring a consultant or marketing agency to conduct any of the campaigns is tax deductible.
Social Media Expenses:
There is a lot that goes along with running your social media accounts, and most of this can be deducted at the end of the year. This includes paying a consult or marketing agency to run your social media channels and fees associated with them and content-creation expenses and subscriptions.
Technology & Marketing Software Expenses:
If you use a paid customer database, scheduling tool or marketing software that has monthly or annual subscriptions, you are allowed to deduct marketing expenses used to generate or keep customers.
Print Advertising Expenses:
Creation and printing of advertising materials like brochures, mailers, or business card to generate or keep customers are allowed to be deductible.
Multimedia Advertising Expenses:
This includes any ads your business run on TV, cable, or the radio. This also includes any airtime purchased on podcast or other audio-only channels.
Special Promotions:
This is a catch-all category for anything promotion related that you did throughout the year for your small business. This includes hosting seminars, webinars, or workshops to promote your products or services, sponsoring a local event or even paying to have a logo on a banner or brochure. This is also deductible, so it is important to keep track of those invoices.
Marketing Expenses That Are Not Tax-Deductible:
Even though there are many marketing tax deductions for business owners, you can’t deduct cost that are primarily personal or hobbies, even though they have some promotion values. There are a few things that don’t quite make the cut for tax deductions. These include the following:
- Cost that are primarily for personal or hobbies.
- Cost of personal hobbies carried on with the business associates, like taking them to an event.
- You cannot deduct advertising expenses associated with research and development activities.
- Advertising as an Indirect Political Contribution. You can’t deduct the cost of advertising in any publication or website used by or for a political party. No Political expenses are deductible for businesses.
- You can deduct the cost of putting an advertisement for your business on your car, but you can’t deduct the cost of driving your care around town as an advertising expense.
If you run a business, you may be able to write off the cost of your advertising and marketing. It may be a good idea to check with your accountant to see if your business has any advertising and marketing cost that can be deductible and can help you save money. Hope our article helped you learn more about the tax deduction of advertising and marketing cost. As always, if you have any questions about this topic or if you are interested in learning more about how to deduct other business cost, please contact us at (208)366-6997 or email us at info@kcstaxes.com.
