This is the time of year when businesses start to give back–either through charitable donations or with gifts to their teams and clients.
Giving is a great way to reduce your tax burden, make a difference in someone else’s life and to say thank you to the people who have worked with you or for you throughout the year. There are so many ways and reasons that giving is a “win” for you as a business owner.
But there are also things to watch out for and consider before hitting the online shops with your credit card. Not all giving is made equal, and not every gift is a tax deduction.
I don’t think giving should be from the perspective of looking for a tax break, but rather something you can (and should) do throughout the year. It’s something you do because you’re called to do it or because you’re thinking about someone–not something you have to do, and at a certain price point.
So before you decide to grab gifts for anyone and everyone, or give away thousands because it might make you look good, have a good reason to give. And put some limits in place.
Make it part of your company culture
Many companies out there give as part of their culture. They donate their time, money and resources to organizations, bringing their employees along for the ride. This helps to strengthen teams company-wide while also getting employees more engaged in the business and community. Not only that, but people who give back have a deeper sense of fulfillment, making them happier employees (and therefore more productive).
Be conscious of how much you’re spending
Of course you’re not going over your budget when donating and gifting, right? It’s easy to let down your hair and spend a bit too much during the holiday season, but it’s important to plan in advance what you’ll spend for each person. Know what your overall budget is for clients and team members and then plan out gifting accordingly. A word of warning: The price of gifts should be comparable to either company standing or years of service. And know that team members will likely compare notes, especially if they all work under one roof.
Know tax limits before buying client gifts
As I mentioned, talking to your tax preparer should be your top priority if you’re planning to use your client gifts as tax deductions. The IRS only allows you to allocate a certain amount per client, and your CPA should be asking you about this. Don’t let tax breaks (or the lack thereof) stop you from giving though. One of the best things about giving is not expecting anything in return.
As a business owner or decision-maker, it’s your personal preference that will make all the difference when choosing how and when to give back–to your team, your clients and your community. Be sure you’re doing it from the right mindset. It’s not about getting credit for helping, it’s about doing the right thing for the right people.
