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Deducting Advertising and Promotional Expenses

As a small business owner, you're probably putting some money towards advertising. In most cases, the IRS allows you to deduct advertising expenses used to promote your business to new or existing customers or clients.

Advertising expenses you can deduct

Typically, you can deduct advertising expenses that are directly related to your business activities. Some common examples include:

  • Running ads on Google, Facebook, and Instagram

  • Subscribing to email marketing and customer management platforms

  • Contracting a company to run a marketing campaign for your business

  • Advertising in newspapers, magazines, TV, and billboards

  • Purchasing a website domain and website builder

  • Buying marketing collateral such as business cards, brochures, and flyers

You can also deduct expenses for what's known as "goodwill advertising." These are types of promotions that build the reputation of your brand in the public eye and includes:

  • Sponsoring a local sports team

  • Giving away products or samples

  • Providing meals or entertainment to the general public

  • Using paid advertising to encourage people to donate to a charity or cause

Advertising expenses that aren't deductible

Now there are some forms of advertising that aren't deductible. You can't deduct expenses used to influence legislation, also known as "lobbying expenses." This includes advertising at a political convention or on a political website.

You also can't deduct car expenses for a car simply because it has an advertisement on it. While you can deduct the cost of getting a decal, this doesn't change the use of your car from personal to business so you can't deduct any car-related expenses you incur as an advertising expense.

Recording Your Expenses

Tax deductions can be a confusing topic but one of the most important things to do is keep accurate and complete records. If you're unsure whether something is deductible, you should contact your accountant or bookkeeper.

If you need help with bookkeeping or marketing, we offer both services here at Summit Bookkeeping. Give us a call at (360) 756-5020 to learn more!


Disclaimer: This post is meant for informational purposes only and should not be taken as legal, business, or tax advice. Please consult with your accountant or bookkeeper for more information based on your specific situation. For more information, please read through the following resource:


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