Tax deductions for small business can mean more money in the company coffers, but their complexities often leave SMBs wondering what exactly is tax deductible.
Most who are self-employed or small business owners use tax deductions and write offs to relieve the effects of tax time on their bottom line. What’s funny is that of all the deductions they claim, not many think to deduct their marketing expenses. Sure, you’ll hear about auto maintenance and mileage, deducting your home office, business-related supplies or expenses, and other tax deductions for self-employed and small business, but somehow marketing expenses may slip your mind.
According to the IRS, your advertising marketing expenses must be reasonable and directly related to your business activities to be tax deductible.
Here are some real-world examples of marketing expenses that are deductible:
As an ordinary business expense, the cost for the creation and production is typically deductible. Similar to business cards, brochures, newspaper ads, holiday cards, etc. – ordinary marketing expenses are tax deductions come tax time. You’ll want details and receipts for these purchases, with clear, documented use for each expense in the event the IRS wants to look more closely.
A New Website
Launching a new website and the accompanying related costs could be fully-deductible. Here’s a look at what’s tax deductible:
- Cost for the design if you hired someone to do it
- Cost for the template if you purchased the design pre-made
- Cost for hosting the site and the domain fee
- Cost for any premium services (like add-ons or plug-ins for your site)
- Cost for maintenance
Even if you didn’t have a new website created this year, your hosting and fees associated with the maintenance and upkeep may be deductible.
If you created a new blog and are using freelance bloggers for your content, be sure to keep records of your related expenses because they can often be tax deductions as well.
Search or Social Marketing Campaign
If you ran a search campaign or any kind of social marketing campaign, your costs may be tax deductible. Similar to traditional forms of advertising on paper, marketing campaign-related costs through digital channels can also be deductible. Here are some examples:
- Google AdWords or Search Pay-per-click(PPC) campaigns
- Facebook ad campaigns
- Twitter ad campaigns
- Display banner ad campaigns
- Costs for hiring an agency to conduct any of the campaigns above
Again, you’ll want detailed records and receipts for these marketing expenses.
It’s important to remember however: you should always consult with a tax professional about what is and is not deductible for your tax situation. Keep documentation and detailed records of how things were used.
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