Tis the Season for Giving
By Deana Molinari
Companies can gift themselves, the community and the nation at this time of year. With thoughtful strategic planning, gifts can serve more than one purpose.
Prepare Gifts to Uncle Sam
Taxes can be thought of as a seasonal gift to the government. Business startup costs are deductions that occur before the company opens and would be acceptable to the IRS if the business was open and running. The deductions are capital costs, defined as a fixed, one-time expense for the purchase of land, buildings, construction, and equipment used in the production of goods or in the rendering of services. In other words, the total cost needed to bring a project to a commercially operable status.
What a great gift to give one’s family. Startup costs are often expensive leaving the family wondering how they will survive the New Year. Uncle Sam’s deduction helps a bit with the hope for survival.
There are other ways of contributing to the family. If the owner contributes to a retirement fund with a pretax program, more money is saved. The final date for a contribution is December 31.
Paying estimated taxes is another way to decrease the end of the year cost burden. If the business owes more than $1,000 to the government, quarterly payments are expected.
Technology enables keeping accurate records of expenses and income. The computer based accounting system links banks, cash registers, credit cards, inventory, and employee records together. Photos taken of expense receipts can be stored in a cloud. Not only does the strategy simplify record keeping, the system avoids problems with over or under estimating income and expenses.
Share with the Community
Community giving can also qualify for tax deductions. Giving to local charities is appreciated by the community and is as good as advertising your business. Don’t forget to store the tax ID for each charity receiving a donation. The best reason to give to the community is because everyone needs a little help in the deep, dark time of winter. Families remember kindness and more apt to refer others to your resources after a gift. Many families are loyal to the community and will support businesses just because they help the community school, sports, parks, and service organizations.
Other Ways to Wrap Community Gifts
Marketing promotes business in more than one way. The business brand can be solidified as well as stimulate sales. Consider the value of the following ideas:
- Coupons
- Discounts
- Gifts to needy families
- Provision of goods for service organizations like soup kitchens, second hand goods charities,
- sports, etc.
- Participation in community activities like fairs and holiday celebrations
- Matched donations
- Shared time and labor with a needy charity
- Internships
- Classes that use the business’s products
Long term charitable projects serve companies better than a “one-off” gift. Companies that work with charitable organizations award themselves while assisting others. Any donation is considered good business, but a cause-related donation that is tightly aligned with a business’s mission can capture the public’s interest and strengthen the brand.
Consider aligning the company’s social goals with its financial goals. Most companies consider charitable limits so that donating is more useful. Promoting employee wellbeing and social goals can double the impact of giving. Businesses are seen as sensitive to community needs and employees tend to be more supportive of a business with “heart”.
Other tax beneficial strategies include: Delay buying equipment or expensive capital projects until the end of the year. Another thought is to defer this year’s income to next year by waiting until December to invoice customers. That way the income is not received until after the New Year.
Corporations, partnerships and single proprietor taxes are due on different dates than the family income tax. If the government is working on new tax laws, everyone needs to study the regulations in order to avoid problems.
Deana and Byron Molinari write for new business owners and entrepreneurs. They encourage artisans to open their own business and to sell to the trending online audience looking for unique items. Her blog is part of the Artistic Perspectives business that includes start-u- classes, and a global shoppe where owners learn to sell to the world wide audience.