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You’re probably spending a fair amount of money on advertising your small business to potential clients and customers. Did you know most of your marketing and advertising can be written off as a tax deduction to lower your tax bill?

Whether you’ve got a whole marketing team running the show or you just purchased your first  ad, most money spent on promoting your small business is tax deductible.

According to the IRS, the criteria that your advertising expense must meet to qualify as a deduction is that it is ordinary (i.e. common and accepted in your industry) or necessary (i.e. helpful and appropriate for your business). Marketing and advertising are both essential to growing and promoting your business, which makes them ordinary and necessary.

Common Tax-Deductible Advertising Expenses

Just because the IRS terms an advertising expense as “ordinary” doesn’t mean you can’t be creative when it comes to ways you advertise. As long as the purpose is to bring in new customers and keep existing ones, you should be covered. Just be sure you know and document the business purpose.

The few exceptions include expenses that are used primarily for personal use or gain, not business promotion. In addition, though donating products or money to a community event or charity are tax deductible, donating services or time are not. Again, be sure to know and be able to show how the expense benefits your business. When in doubt about a specific advertising expense and if it’s tax deductible, ask your accountant.

20 Common Tax-Deductible Advertising Expenses for Small Businesses

Here’s a list of the top 20 most common advertising expenses for small business owners to keep in mind come tax season. All of these are tax-deductible:

  1. Website set-up, design, and maintenance
  2. Pay-per-click ads and online advertisements (Google, Facebook, LinkedIn, YouTube, etc.)
  3. Social media promotions
  4. Promotional materials with your logo such as t-shirts, mugs, pens, notepads and more
  5. Graphic design fees: logos, business cards, brochures, signs, printed or online advertisements, flyers, or other promotional materials designed professionally
  6. Printing of promotional materials: business cards, flyers, postcards, brochures, and coupons
  7. Storefront signs
  8. Vehicle signs or vinyl decals for windows
  9. Giveaways and promotions
  10. Radio advertisements
  11. Magazine or newspaper advertisements
  12. Television commercials
  13. Balloons, decorations, refreshments, and any other expenses incurred for parties or open houses promoting your business
  14. SEO services
  15. Packaging, design, and materials for your products

Tax-Deductible Goodwill Advertising Expenses

Tax-Deductible Goodwill Advertising Expenses

The following are considered goodwill advertising expenses and are tax deductible as well. Goodwill advertising is any type of promotion that keeps your small business in the public eye.

16. Sponsoring a youth sports team in your community such as little league baseball or soccer

17. Money donated to a school, charity, or local cause

18. Participating in a parade to promote your business, such as handing out flyers, candy, frisbees, pens, or shirts

19. Giving away products or samples

20. Advertisements encouraging people to donate to a certain charity, like the Red Cross

FAQs about Tax-Deductible Advertising Expenses for Small Businesses:

What qualifies as tax-deductible advertising expenses for my small business?

Advertising expenses must be ordinary and necessary for your industry. This includes various marketing efforts aimed at promoting your business.

Can I get creative with my advertising strategies and still claim them as deductions?

Yes, as long as your creative strategies aim to attract new customers or retain existing ones, they can be tax deductible. Ensure you document their business purpose.

Are there any exceptions to tax-deductible advertising expenses?

Expenses primarily for personal use or unrelated to business promotion aren’t deductible. Donating services or time is also non-deductible.

How can I determine if a specific advertising expense is tax deductible?

Consult with your accountant if uncertain about the deductibility of a particular expense. Ensure you can demonstrate how it benefits your business.

What are some examples of goodwill advertising expenses that are tax deductible?

Examples include sponsoring local sports teams, donating to schools or charities, participating in community events, giving away products or samples, and promoting charity donations.

So you’ve reviewed your website and got it looking top-notch? That’s great! The next step in improving your online presence is to perform a quarterly social media audit. Here is a quick checklist for doing that:

Make a list of all social media accounts

  • Make a list of all social media accounts that your business is part of and plan to update each account. Note any specific edits that you’ve been meaning to fix and haven’t yet.
  • While you’re doing this, make a list of all usernames and passwords and store them in a safe place. Update your passwords as needed and share them with the correct people in your company.
  • Make sure all links on your website and newsletter work properly and are directed to the correct account. Only display links of accounts that are actively managed.
  • Check all contact information: make sure phone numbers, emails, links to websites, and addresses are current on all accounts. Refresh your “about” page(s) and business description as needed.
  • Update all cover photos with a fresh look and make sure any important information isn’t hidden behind profile pictures. Your cover photos should show the benefits of your product or service, have a call to action, or show happy people with your product or logo. Check out this complete list of social media cover photo sizes before you begin designing.
  • Create an editorial calendar for your team. It should include a consistent posting schedule for all social media accounts. A good rule of thumb is to update your Facebook page at least once a week, Twitter once a day, Instagram two to three times a week, and Pinterest at least once a week. Ideally, a member of your team could manage all social media accounts and post even more than that. A great resource for scheduling your social media posts from all accounts is Hootsuite.com.
  • Place a call-to-action on your social media accounts. You can use Facebook to share an “offer” (maybe a free month of your service or a coupon for your followers); post a few quick tweets asking followers to sign up for your newsletter, or include a link in your social media posts that simply directs traffic to your website.
  • Plan contests, sales, discounts, and giveaways for the year and advertise them through social media. All of these things should be announced and advertised in advance, and then include an extra push on social media while the sale or giveaway is occurring.

Not only do refreshed and well-maintained social media accounts keep your business image looking sharp, they help you engage with your followers, learn about your audience, and interact with current and potential customers on a personal level.

Read the rest of the series here and here.

Other posts that might interest you

4 Low Cost and Low Risk Ways to Grow Your Team

Planning Your Summer Marketing Efforts Part 1: Who, What, When, and Where

Planning Your Summer Marketing Efforts Part 2: Celebrating Holiday and Events

Planning Your Summer Marketing Efforts Part 3: Cheap Advertising Tips

How To Attract the Right Talent For Your Company

Quick Money Management Tips to Build Your Business

Plan for Holiday Success by Hiring Seasonal Employees

How to Create a Succession Plan for Your Small Business

How to Protect Your Small Business from Theft

If you own a small business, you undoubtedly work from home, at least on occasion. If you’re like many small business owners in today’s world, you might even work exclusively from home. Whichever category you fall under, claiming a “home office” on your taxes and adding it into your small business bookkeeping can be tricky.

Here’s how to set up and maintain a home office that is in line with IRS standards.

What qualifies as a home office?

What home office expenses are tax deductible?

How do I claim a home office on my taxes?

What if I do business outside of my home office?

Can I claim a bathroom as part of my home office?

Do you have other questions about your home office? We can help! Send us your questions or leave them on our Facebook page and we’ll be sure to answer them as quickly as possible.

Unfortunately, no. You can’t claim a bathroom as part of your home office, even though you likely take a potty break or two during your work day.

Remember the two most important words when it comes to home offices?

Exclusive and Regular. Even if you mostly use the bathroom closest to your home office while you work, the second you use it as a guest bathroom, for your children, or “off the clock,” it’s not exclusive anymore. In all reality, that’s not happening in most homes. Nine out of 10 times you can’t claim a bathroom as part of your home office.

Take this case study, for example:

“In T.C. Memo. 2011-201, Luis Bulas, Petitioner, v. Commissioner of Internal Revenue, Respondent, Docket No. 18977-09, U.S. Tax Court Judge Haines agreed with the IRS that taxpayer Luis Bulas was not entitled to a deduction for his use of the bathroom as a home office expense.

Bulas, a Florida taxpayer, knows a little something about the tax system. He has a master’s degree in accounting from Florida International University. Even better, he worked for the IRS for seven years as a tax technician, revenue agent, Appeals auditor, and Appeals officer, prior to starting his own tax agency. So, yes, for a long while, he was the guy who helped make decisions about whether a taxpayer was complying with the tax laws (cue music).

Bulas also happens to be a father of two daughters, one in high school and one in college, that helped him out with the business from time to time. This is only relevant because he claimed that he paid wages to his daughters and yet managed not to issue any forms 1099 or forms W-2 to them, a fact that also came up as part of his examination.

But, yawn. That’s kind of run of the mill boring stuff. Let’s get to the potty humor.

Bulas was flush enough (wince, I know, terrible pun) to have a personal residence which included a house, a garage, and a guesthouse. The total amount of space worked out to about 2,677.34 square feet.

Like many professionals, Bulas used one of the rooms in his home – in this case, a spare bedroom – as his office space. The total amount of the space for the bedroom was 226.3 square feet. Bulas eventually put an additional bathroom in his home, ostensibly for his clients’ use.

The IRS issued Bulas a notice of deficiency, denying the deductions for the wages paid to his daughters and the business use of his residence. Bulas, of course, appealed, which is how the case made it to Tax Court.

Bulas claimed that he used one of the bedrooms in his house exclusively for his office. Um, okay. That seems reasonable.

Bulas also argued, however, that he used the hallway – wait, he’s losing me here – and the bathroom exclusively for his accounting business. He went on to testify that his children and personal guests also used the bathroom.

The IRS was willing to grant him the use of the bedroom. The bedroom was, as mentioned earlier, about 226.3 square feet, which worked out to about 8.45% of the total square feet associated with Bulas’ residence. That means that he was entitled to pro-rate his allocable expenses and take 8.45% as a business deduction. No more. Bulas could not offer proof that the personal use of the hallway and bathroom met any exception under section 280A(c) of the Tax Code and thus, the personal use of the space trumped the business use. The result? He lost the deduction.”

Even though a regular office has a bathroom (let’s hope anyway!) you can’t claim one on your home office. There are, however, a plethora of other deductions available when claiming a home office. Capitalize on those and let go of that extra 100 sq ft you thought you might be able to claim this year.

When it comes to home offices, it’s all about the tax deductions, baby! You could sit on your couch, watch tv, and do your small business bookkeeping and billing…but there’s no tax benefit to that. By creating and maintaining a home office for your small business, you can claim home office deductions that in turn reduce your taxable income at the end of the year. If you have already set up a qualifying home office, start tracking expenses and keeping meticulous records for your income taxes.

Here’s a lengthy, though not comprehensive, list of common home office deductions. Keep in mind these do not include typical business expenses that you would normally deduct whether or not you had a home office.

Tax Deductible Home Office Expenses

  • Paint
  • Carpet
  • Repairs or additions to the structure of the office
  • To learn about the unlikely deduction a bathroom as a portion of your home office, read this post.
  • Office decorations
  • Office furniture including desks, chairs, rugs, lamps, and that fancy painting you just had to have to hang above your desk
  • A separate business phone line (you cannot deduct a landline used for your home phone calls)
  • Other home-related expenses or repairs including snow plowing, roof repair, and trash removal. These types of expenses are deductible, according to the square-footage percentage of your home used as a business.
  • *You cannot deduct expenses for landscaping or lawn care unless you show off your lawn for your business, like if you own a landscaping company.

You can deduct a portion of these expenses, based on the square footage of your home office:

  • Depreciation
  • Rent or mortgage
  • Property Taxes
  • Home insurance
  • Utilities (electricity, heating, water, sewer)
  • Maintenance
  • General repairs

Home office deductions can be tricky. While claiming a home office is not a red flag for the IRS, you want to be careful and not get overzealous when it comes to deductions. The simplified method can make it easier for you to claim the deduction but might not provide you with biggest deduction.

If you own a small business, you undoubtedly work from home, at least on occasion. If you’re like many small business owners in today’s world, you might even work exclusively from home. Whichever category you fall under, claiming a “home office” on your taxes can be tricky. Here’s a quick step-by-step guide to make sure you’re in line with IRS standards when it comes to your home office.

Home Office for a Small Business Owner

First, to claim a home office on your taxes, both of these things must apply:

  • You use the part of your home exclusively and regularly for your business. If an auditor were to come to your home, they would be able to easily identify your home office. This means the area can’t double as a play area for children or living room for your family. It should look just like a regular office would.
  • The business part of your home must be one of these to qualify:
    • Your main place of business
    • A place where you meet or deal with clients
    • A separate structure (not attached to your home) that you use for your business

Exclusive Use Explained

Exclusive use means you use the area in your home for business purposes only. The area must meet these requirements to be considered “exclusive”:

  • A room or other separately identifiable space, but it doesn’t necessarily need to be separated by a wall or permanent partition
  • The space cannot be used for business and personal purposes
  • The area cannot contain personal-use furnishings like a TV or a couch, even though these items are common in many businesses

Regular Use Explained

Regular use means you use part of the home on a continuous, ongoing, or recurring basis. You can use the space for more than one business, and you can have more than one business location (other than your home office) for each business as well. However, if you’re deducting a home office on your taxes, your home must be the principal place of business. Factors considered in “regular use” of a home office include:

  • Meeting clients or conversing over phone, Skype, or email
  • Selling or delivering goods or services
  • Administrative activities of your business like billing customers, bookkeeping and accounting tasks, ordering supplies, setting up appointments, contacting customers
  • Updating your website, managing SEO, and other computer-based tasks

If you’re employed by another company and work from home, you can also claim a home office. Here’s how:

  • You must meet the home office requirements above.
  • Factors determining home office eligibility as an employee may also include:
    • The employer requires you to maintain a home office as a condition of employment.
    • Your work for their business isn’t possible without a home office.
    • The employer doesn’t provide a space for you to work outside your home office.
    • You don’t rent any part of your home to your employer and use the rented portion to perform services as an employee.

If you’re already working from home and haven’t set up a home office, now is the time. Home office deductions can save you big money on your taxes and help keep your small business activities more organized.

If you read our last post, you know that in order for a home office to be claimed on taxes, it must be used exclusively and regularly for business use. However, that doesn’t mean it has to be the one and only place you do business. Here’s how to keep your home office status as an entrepreneur and still be able to conduct business where you need to.

You can still claim a home office if any of the following apply:

  • Other people conduct administrative or management activities for your business at their business location. Ex: Your accountant does your small business bookkeeping from their office.
  • You conduct administrative or management activities at places that aren’t fixed locations of the business, like in a car or a hotel room.
  • You conduct a substantial amount of these non-administrative and non-management business activities at a fixed location outside your home, like meeting clients for lunch or traveling to conferences.
  • You have suitable space to conduct administrative or management activities outside your home, like at your regular business office. However, you choose to use the home office for those activities.

If you own multiple businesses and work on them both at home AND at an office:

  • Follow IRS guidelines to find out if your home office is the principal place of business for each. It might be for one and not the other.
  • A home office might be the main place of business for more than one activity. However, each activity you conducted in the office must meet all requirements for the deduction. Otherwise, you won’t meet the exclusive-use test for any activity.

Essentially, your home office doesn’t have to be the only place you do business. Your daily business activities as an entrepreneur will undoubtedly take you further than the walls of your home. However, the regular and exclusive use guidelines are most important when determining if your home office is tax deductible.

use part of your home for business

If you use part of your home for business, you may be able to claim a home office on your taxes this year. The home office deduction is available for homeowners and renters, and applies to all types of homes. Learn more if your workspace qualifies as a home office, here.

There are a few ways to claim a home office on your taxes. In 2013, the IRS rolled out the Simplified Method for home offices which can significantly reduce record keeping burden by allowing a small business owner or employee to calculate square footage of a home office and multiply that by a prescribed rate ($5 per square foot for a maximum of 300 square feet), instead of calculating actual expenses.

The Regular Method requires a small business owner to calculate the actual expenses of their home office. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. Generally, when using the regular method, deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities.

Either method is fine for claiming a home office, and some small business owners find one way to be more beneficial than the other. Keep in mind that the method you use to claim your home office is not as important as the use of the space being used exclusively and regularly for business use.

For a full list of deductions and qualifications for a home office from the IRS, click here. Be sure to consult a professional accountant and virtual bookkeeper before claiming a home office on your taxes to make the most of your deductions. Vyde can help with any questions you may have about your home office.

FAQs about Claiming a Home Office on Your Taxes

1. Who qualifies for claiming a home office on taxes?
Homeowners and renters who use part of their home exclusively for business may qualify.
2. What are the methods available for claiming a home office deduction?
The Simplified Method and the Regular Method are the two options provided by the IRS.
3. How does the Simplified Method work?
It involves multiplying the square footage of the home office by a prescribed rate, offering a simplified approach to calculating deductions.
4. What expenses can be included when using the Regular Method?
Expenses such as mortgage interest, insurance, utilities, repairs, and depreciation can be considered.
5. Is it necessary for the home office to be a separate room?
No, as long as the space is used exclusively and regularly for business, it qualifies regardless of whether it’s a whole room or part of one.

HomeOfficeIf you own a small business, you undoubtedly work from home, at least on occasion. If you’re like many small business owners in today’s world, you might even work exclusively from home. Whichever category you fall under, claiming a “home office” on your taxes can be tricky. Here’s a quick step-by-step guide to make sure you’re in line with IRS standards when it comes to your home office.

Home Office for a Small Business Owner

First, to claim a home office on your taxes, both of these things must apply:

  • You use the part of your home exclusively and regularly for your business. If an auditor were to come to your home, they would be able to easily identify your home office. This means the area can’t double as a play area for children or living room for your family. It should look just like a regular office would.
  • The business part of your home must be one of these to qualify:
    • Your main place of business
    • A place where you meet or deal with clients
    • A separate structure (not attached to your home) that you use for your business

Exclusive Use Explained

Exclusive use means you use the area in your home for business purposes only. The area must meet these requirements to be considered “exclusive”:

  • A room or other separately identifiable space, but it doesn’t necessarily need to be separated by a wall or permanent partition
  • The space cannot be used for business and personal purposes
  • The area cannot contain personal-use furnishings like a TV or a couch, even though these items are common in many businesses

Regular Use Explained

Regular use means you use part of the home on a continuous, ongoing, or recurring basis. You can use the space for more than one business, and you can have more than one business location (other than your home office) for each business as well. However, if you’re deducting a home office on your taxes, your home must be the principal place of business. Factors considered in “regular use” of a home office include:

  • Meeting clients or conversing over phone, Skype, or email
  • Selling or delivering goods or services
  • Administrative activities of your business like billing customers, small business bookkeeping and accounting tasks, ordering supplies, setting up appointments, contacting customers
  • Updating your website, managing SEO, and other computer-based tasks

If you’re employed by another company and work from home, you can also claim a home office. Here’s how:

  • You must meet the home office requirements above.
  • Factors determining home office eligibility as an employee may also include:
    • The employer requires you to maintain a home office as a condition of employment.
    • Your work for their business isn’t possible without a home office.
    • The employer doesn’t provide a space for you to work outside your home office.
    • You don’t rent any part of your home to your employer and use the rented portion to perform services as an employee.

If you’re already working from home and haven’t set up a home office, now is the time. Home office deductions can save you big money on your taxes and help keep your small business activities more organized. A professional accountant knows the ins and outs of working from home and can answer your questions, save you money on taxes, and make sure you get the most out of your home office deductions.

I'm a Blogger. Can I Deduct Hosting, Web, and Design Fees?

Do hosting, web, and design fees count as deductions? Yes, as long as they’re specific to the running of your site or blog, they count.

Here’s the quick list if you’re running short on time:

  • Design fees  – a new logo or look for your site, even business cards.
  • Hosting fees – unless you’ve got blogspot.com or wordpress.com in your site address you’re paying for your own little piece of the internet.
  • Web Management & SEO

Read on for the fine print on deducting these fees and expenses.

There are a lot of hidden expenses for bloggers. Design fees, hosting, web management, SEO. The list goes on and it can get terribly expensive – but with a little knowledge about what is or is not a valid deduction, you’ll end up saving yourself a dime or two come tax time.

Whether you write a fashion blog, a foodie blog, or a blog about web design you’re probably paying for domain names, and site hosting. Seeing that you’re already paying the bill, why not save the receipt and have it be a write off at tax time?

It doesn’t matter if your blog isn’t about tech stuff, the behind the scenes stuff of running your blog are still related, so they count.

Don’t forget the fees you pay to a graphic designer for your logo and business cards. It may only make your site appealing, but it’s an element meant to build your blog and network so it’s a valid deduction as well.

We find that trying to come up with ideas for deductions as you’re trying to file makes things harder. Take just a few minutes right now and start listing off recent expenses that are blog related. If you’ve got a few more minutes to spare, start tracking down receipts for specific dollar amounts and update your small business bookkeeping with what you find. And from here on out, print off or save all receipts – that way you’re that much closer to finishing your taxes when April 15 comes rolling around again.

To learn more about accounting for bloggers, visit these posts:

Accounting 101 for Bloggers

Taxes for Bloggers

Top 20 Items Bloggers can Deduct on their Taxes

Is My Blog a Business or a Hobby?

How Do I Legally Operate a Contest or Giveaway on My Blog?

3 Tips to Increase Blog Profits

How Do I Pay My Blog Employees?

Can I Pay My Family For Their Help?

Can I Deduct Conference Registration Fees, Travel, and Meals?