Most successful small business owners do everything they can to run an efficient financial operation.
Expenses are meticulously calculated so that every dollar spent serves a purpose, which means that marketing and advertising dollars are no exception. But what do those dollars mean when it comes to tax time?
Well, before we answer the question of can you write off marketing and advertising expenses as a business, we want to be clear that you should consult a certified professional regarding tax questions specific to your situation.
Having said that – the rules regarding marketing and advertising are fortunately fairly straightforward.
The short answer? Yes.
According to the IRS, you generally can deduct reasonable advertising expenses that are directly related to your business activities. This means, in so many words, that any monies spent in an effort to either bring in new customers or maintain old ones may generally be deducted from a business’ taxable income.
The somewhat broad category of advertising might include anything from pay-per-click online ads to business cards or special promotional events.
But before you go digging through your books looking for things to write off, there are some nuances worth considering…
For one, driving your car around town is never an advertising or marketing cost. Yes, even if you have company-related branding on it.
The cost of any marketing material on the car can be deducted, but the vehicle itself, whether business or personal, falls into its own category as far as your taxes are concerned. This is worth mentioning because the subject is often misunderstood.
So often, in fact, that the IRS mentions it specifically in the 2019 Publication 463 on Travel, Gift, and Car Expenses.
It’s also worth noting that the IRS maintains a distinction between advertising and selling. If, for example, you own and maintain a website that provides users the opportunity to purchase products, that site would be considered a selling expense, which is considered apart from marketing and advertising costs.
Finally, any and all lobbying expenses are generally not tax-deductible. This may include contributions to political campaigns, attempts to influence legislation, and research pertaining to either.
For more information, the IRS publication on business expenses is a great place to start.
The language is plain and the concepts are generally simple enough. For those things that you aren’t sure about, it’s best to seek expert advice.