As the year draws to a close and Giving Tuesday approaches, now is an excellent time to look for ways to maximize your tax deductions. As you do, remember that your small business can take advantage of a powerful opportunity to impact your community and also enjoy terrific tax benefits through charitable giving. It’s a simple way to maximize your tax benefits, while also improving your long-term, bottom-line results — making charitable giving through your small business a win-win for both your business and the charity of your choice.
Not sure how to make the most of charitable giving for your small business? Here are 5 handy tips to remove the mystery from the process and free you to focus on your business goals:
1. Giving Is About More than Money
Besides the tax deduction you can take, there are many business benefits that arise from charitable giving:
- Making a Difference — When you give to local charities, you’re helping people in your community and making the world a better place to live.
- Building Brand Awareness — With your logo on the charity’s promotional materials, it’s a sure bet new target customers will discover your business.
- Creating Goodwill — Research indicates that consumers are more likely to purchase from your business if you’re involved in charitable work.
- Networking — Charity events are a great place to meet other businesspeople, entrepreneurs and influential community members.
- Boosting Morale — Employees who volunteer through their company feel more positive about their employer and have stronger relationships with coworkers.
2. Americans Love to Give
Volunteerism is a popular activity among Americans. Consider these numbers as you consider giving as a part of your annual small business plan:
- 81% of employees report better relationships with co-workers as a result of doing volunteer work through their company.*
- 85% of consumers are more likely to purchase goods and services from a business that is associated with charity work.**
- More than 62.6 million Americans volunteer each year to help the charity of their choice.***
3. There Are Many Ways to Give
There are several ways your small business can donate to charity and qualify for a tax deduction. As always, check with the IRS or your tax account for specific information on how to make your donations tax deductible, but here are some general rules:
- Cash or Check — A monetary donation is a simple, effective way to help the charity of your choice.
- In Kind — You can also donate your business’s products and services if you meet IRS requirements.
- Property Donations — When you upgrade computers, furniture or other business property, consider donating quality used property to charity.
- Volunteering — Many businesses give their employees opportunities to volunteer during business hours.
- Sponsorship— Become a partner with a local charity to sponsor their donors ball, 5K run, silent auction or other fundraising events.
4. Know What the IRS Requires
The IRS has strict qualifications for determining the validity of your small business’s charitable deductions. These tips can help:
- Do Your Research — Make sure the charity is recognized by the IRS before you give. If you’re not sure, you can use the IRS online search tool to check.
- Keep Good Records — Document your giving with receipts, cashed checks, and/or written confirmation of your donation from the charity.
- File the Right Forms — There are various IRS forms for itemizing business deductions, making non-cash contributions and more. Your accountant can help you choose and complete the proper forms.
5. Consult an Accountant that Knows Small Businesses
When you’re ready to make a positive impact on your community through charitable giving, be sure to choose a small business accounting firm that can help you successfully navigate the ins and outs of charitable giving for small businesses.
Here at Shockley Bookkeeping & Tax Service, we offer a full range of bookkeeping services to help your small business stay on top of finances and maximize tax deductions. We make it easy for you to do your taxes at the end of the year, so you can concentrate on what you love most — your business, your customers, your family and friends — your life.
Find out more about how we can help alleviate the burden of maintaining your books and empower you to focus on growing your business. Contact us today for a free quote and consultation.
Footnotes for source material:
* Doing Good Is Good for You: 2013 Health and Volunteering Study, UnitedHealth Group
** 2010 Cone Cause Evolution Study
*** Volunteering in the United States, 2015, Bureau of Labor Statistics