Deducting Your Business Promotion Expenses

By QuickBooks Canada Team

1 min read

Sales-oriented businesses need to play the numbers game. Many retail and service organizations need a way to get their names in front of as many prospects as possible, hoping that a loyal client base will result. To develop that following, owners market their companies through many different means. Most promotional items and advertisements require out-of-pocket costs, but some of that expense can be recovered at tax time. Review tax laws or consult with a professional before making the assumption that every dollar you spend is deductible. The full cost of obvious items that you use to build your business can be deducted from taxable income. Small trinkets such as pens, T-shirts, and notepads can be distributed to customers and prospects and then claimed against business income. So can advertising media, such as billboards and flyers. Be careful when claiming newspaper, radio, and website advertising; to qualify, these sources must be owned by a Canadian entity, and determining where these outlets are domiciled can be complicated. While these expenses can be deducted at 100%, only 50% of costs can be claimed from entertaining clients at restaurants or ballgames. Just be sure these events strictly involve business and not pleasure. Keep detailed records of every dollar you spend on marketing and advertising. Some of these expenses may not seem substantial at the point of purchase, but accumulated over a year, these costs can significantly reduce your tax bite, as long as they qualify.

References & Resources

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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