Are charitable contributions beneficial for a business and if so, what kind of documentation is required?
Charitable contributions can qualify as a tax deduction. There are rules, however, so it’s wise to read them over AND to get the help of your tax preparer so you can plan your giving wisely.
Beyond the tax deduction, there are benefits within your business. A huge one is the positive public relations that goes along with supporting non-profit agencies within your community.
A business gains respect and a good reputation by philanthropy. It can actually increase your sales, because people like to support a business who gives back. It’s perfectly okay to note on social media the kinds of causes your business supports.
Giving improves employer-employee relations and workplace morale. Employees respect owners who are willing to give back to the community, and they often have improved productivity.
There is benefit within the community, when businesses support programs that help make our world a better place to live.
You can donate money, property, goods, or time (services). But be sure to read the rules about donating services–you can’t actually deduct the value of your services.
It’s also important to know what types of organizations are qualified to receive deductible contributions. The publication linked above has all the information you need. Just read a little at a time so as not to get overwhelmed. It also includes specifics on receipts you are required to keep based on the type of donation you are making.
Sometimes a business is approached to support activities that may not be deductible: student fundraisers and purchasing programs, for example. While you won’t get tax benefit from some of these types of giving, you can still reap the benefits of respect and reputation both in your workplace and in your community.
Giving tends to benefit the giver at least as much as it does the recipient. I highly recommend maintaining a charitable donations line item in your regular business budget.
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If giving sounds great but reading that linked document doesn’t, contact Cooks Bookkeeping.
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