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Deducting Advertising Expenses from Your Taxes

If you’re trying to grow your business and reach new customers, you’re probably doing some form of advertisement or promotion. If not, you might want to consider it. Not only will it help your business succeed, but just like with most other business expenses, you’re able to deduct advertising costs from your taxes at the end of the year.

How do advertising deductions work? As far as taxes go, they’re fairly simple.

What Advertising Expenses You Can Deduct

Tax deductions are generally put under a phrase known as “ordinary and necessary”. Ordinary is something common and accepted in your trade or business. Necessary is something that is helpful and appropriate.

Advertising is ordinary in almost any industry. Because of this, you can deduct most advertising expenses, whether it’s signs, commercials, pay-per-click costs, online ads, promotional event expenses, and much more.

If you pay to have a website for your business, this is typically considering advertising as well, meaning you can deduct the cost of building and running that.

Best of all, as far as advertising expenses go, you can deduct 100% of the cost. So, are there any limitations when it comes to advertising deductions? It depends on what you consider advertising to be.

What You Can’t Deduct

In order to deduct something as an advertising expense, advertisement must be the central goal. Let’s say you’re having an event for a special occasion. Something unrelated to your business. But you invite some potential business contacts to this event, and even make mention of your business during it.

That does not suddenly make the entire party a promotional, advertising based event.

Similarly, let’s say you’ve branded your vehicle with your logo, phone number, etc. While the actual branding process can be written off as an advertising expense, that doesn’t mean everything you do with the vehicle is suddenly considered an advertisement.

Taxes are About Being Honest and Accurate

When people get into tax trouble, it’s usually because they were dishonest or they made an error in their taxes. At LWS, we work with businesses to ensure that their taxes are complete and proper. We can even help you find deductions you may have otherwise missed.

For tax preparation in Springfield, Ohio, contact us today.


Posted by admin | in Business Tax