In the eyes of the federal government, small business advertising and marketing efforts qualify as fully tax-deductible. As long as the actual expenses are considered ordinary,
reasonable, and necessary, business owners can count on this deduction to lower their liability.
Percentage deductible: 100%
Eligibility: Any marketing or advertising expenses spent on campaigns to generate or retain customers can be deemed eligible.
8 Example deductions:
1. Website Expenses
Designing, developing, and creating a website
Website fees for hosting and maintenance
Ongoing website content creation
Document all of the different accounts and companies you pay each month to deduct website expenses if you use more than one
2. Marketing and Advertising Expenses
Marketing Plan or Marketing Strategy
Content Writing
Sales Enablement
SEO Services
Email Marketing
Newsletters
Graphic Design and Branding
Display banner ad campaigns (except political sites)
Paid Media Marketing: Google AdWords or Search Pay-Per-Click (PPC) campaigns
3. Consultant or Marketing Agency Retainer
Costs for hiring a consultant or marketing agency to conduct any of the campaigns above or below
4. Social Media Expenses
Paying a consultant or marketing agency (anyone outside your company) to run your social media
Content-creation expenses
Fees to companies that manage your social media accounts, and subscription-based social media sites like LinkedIn Pro.
Linked In, Facebook, Twitter, Instagram, ad campaigns
Influencer Marketing (May require 1099 contracts depending upon the amount paid)
5. Technology and Marketing Software Expenses
Monthly costs or annual subscriptions (which generally come with a discount) for software like the following:
Hubspot
Hootsuite
Mailchimp
Any CRM, social scheduling tools, or marketing software
6. Print Advertising Expenses
Ad space in newspapers, magazines, or billboards
Creation and printing of advertising materials like brochures, mailers, or business cards
7. Multimedia Advertising Expenses
Ads on TV, cable, or the radio
8. Special Promotions
Publicity campaigns
Sponsor for a local event or pay to have your logo featured on a local sports jersey (You can deduct the expenses for any special event with the goal that it would expose people to your business)
Hosting seminars, webinars, or workshops promoting your business's services
Swag for clients, influencers, and staff to promote your brand include promotional items like water bottles, t-shirts, and notebooks
Special considerations:
Costs that are considered primarily personal are exempt from deduction, even if they have some promotional value.
Conclusion:
With any of these guidelines, you should check with your accountant to learn what tax deductions and filings are right for your business. If you plan your budget a year ahead, you'll want to include marketing as a necessary operating expense that you can deduct from your taxes. This will help you get into the mindset of investing in marketing for your business this year and for each year to come. You'll find you reach your revenue goals faster and have more to deduct from your bottom line.
Check out the link below for a list of other tax deductions you can claim this tax season!
What questions do you have about tax season? We are here to provide help with tax preparation, accounting, payroll management, and business formation! R&I Tax and Bookkeeping is here to help! You may contact us via our 'Contact' page at https://www.ritbsinc.com/contact. We can also be reached via phone at 253-777-1106.
Laire, Laura. (2021, September 24). Write off Your Marketing Expenses and Save Money on Your Taxes (2021). LAIRE. Retrieved January 10, 2022, from
https://www.lairedigital.com/blog/write-off-your-marketing-expenses-and-save-money-on-your-taxes.
Osterhaus, E. (2021, February 1). Complete list of small business tax deductions (2021). QuickBooks. Retrieved December 16, 2021, from https://quickbooks.intuit.com/r/taxes/small-business-tax-deductions/
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