3 Quick Tips to Expense Christmas Like A Baller

It’s coming up to Christmas. Angels are singing, reindeers are not, and small business owners are prepping for Christmas parties, gifts and holiday meals.

If you want to have a smooth sailing holiday season this year, check out these three quick tips to expense Christmas like a baller…

1. Christmas Gifts To Employees

Christmas gifts are an awesome way to show your employees how much you appreciate their work this year. Here’s what you need to know:

• You can give your employees two non-cash gifts per year on a tax-free basis.
• The total cost of the two gifts including taxes, cannot be over $500 per year.
• You can deduct the total cost of the gifts.
• Employees do not have to declare the cost of these non-cash gifts as part of their taxable income (as long as they are below the $500 threshold).

2. Christmas Parties

There’s no better way to get to know your employees than over a glass of eggnog and Lady Gaga blaring in the background. Here’s what you need to know:

• Christmas parties for staff are 100% deductible as long as the amount you spend is reasonable. (In the extreme case that you go to tax court, it’s up to you to provide evidence that your expenses were reasonable.) You can deduct a max of 6 staff parties a year.
• The amount spent can be a taxable benefit to the employee if the cost is more than $100 per employee.
• Christmas parties for business associates and customers must include a “substantial business discussion” and are usually only 50% deductible as these fall under the realm of client entertainment.

3. Christmas Decorations

Christmas trees, dog sweaters and Christmas ornaments are a fabulous way to get your team into the Christmas spirit. Here’s what you need to know:

• You may be able to expense Christmas decorations as a business expense as long as they are for the office and not used at home and of course are reasonable.

So there you have it.

Those are our 3 quick tips for a successful Christmas. If you would like more tips on how to run a successful business or want to know how to save hours on your accounting every month, give us a call or email us.

We love to chat about small business efficiency.