Company Parties can be 100% Deductible if Done Right!
The Holidays are here and Celebration is in the Air! It has been a roller coaster of a year for several small businesses and many employers are debating whether or not to have their annual Holiday Party to lift up company morale. This decision will be much easier to make once you realize this event is 100% DEDUCTIBLE for your business, if done right!
FIVE TIPS TO CORRECTLY DEDUCT 100% ENTERTAINMENT
1. Create 2 separate Meals & Entertainment accounts in your chart of accounts – one for 50% M&E and the other for 100% Entertainment
2. The IRS allows “expenses for recreational, social or similar activities primarily for the benefit of the employees” to qualify as 100% deduction
3. Documentation is key to make certain this expense qualifies
4. Make sure you have an “ordinary & necessary” reason for the event – lifting up employee morale is a great reason for a holiday party
5. Invite your employee’s spouses – their entertainment expenses are 100% deductible as well