The holiday season is the perfect time to show your clients and employees just how much you appreciate them. However, figuring out what to give, when to give it, and what’s tax deductible can be a daunting task. Mazuma has made it easy with our comprehensive, deductible-focused Business Holiday Gift Giving Guide.
To get the most bang for your buck, you’ll want to give gifts that are tax deductible. While the IRS doesn’t list specific client gifts that you can or cannot deduct, there are limits on how much you can deduct for each client receiving gifts from you. So how do you know what is tax deductible when purchasing a holiday gift to a client or employee?
Purchasing Business Gifts that are Tax Deductible
Currently, the limit is $25 per recipient per year. There is no limit on how many people you can give business gifts to in a year, but the deductible portion for each recipient is $25. That means if you splurge on a $50 gift basket, only half of that amount is actually deductible. If you’ve already sent your clients a gift this year, be mindful of that running total and the $25 yearly limit.
The actual gift isn’t the only tax deductible portion of business holiday gift giving. Wrapping paper, cards, scissors, tape, ribbons and bows are all tax deductible so fancy it up before shipping it out! And when you get to that mile-long post office line this December, keep your receipts because shipping and stamps are deductible as well. These costs are an addition to the $25 per recipient limit, so the actual gift itself can be valued at $25 and these expenses are still deductible.
If the $25 limit feels restrictive to you, there is a way that can help you deduct even more—and probably cut your work in half, too. According to the IRS, if you give a gift of “entertainment,” you can deduct 50% of the cost.
Examples of entertainment gifts are concert tickets, sporting event tickets, movie passes, restaurant gift cards, vacations, hotel stays, etc. Clearly that $25 limit per recipient can quickly be surpassed in these categories, so your deductions may actually be greater than $25 each if you spend $50 or more. Your clients are sure to love the gift of entertainment and you won’t have to bother with the ribbons and bows. In fact, most of this shopping can be done online and sent to your client electronically.
Who to Send Business Gifts to this Holiday Season
Start making a list of those you’d like to give a holiday gift from your business this year and your list may be as long as Santa’s in no time. Here’s a little tip: focus your holiday gift giving on the people who make your company great.
Your business certainly wouldn’t be what it is without the people who support it–your clients. And if you’re not a one-man band, don’t forget about your employees either. Both of these lists of people are essential on your business holiday gift giving list. Other people you may consider sending business gifts to may include some service providers, potential clients, resources, consultants, contract workers, guest speakers, or those who have referred clients to you.
When it comes to client gift giving, things get complicated in a hurry. Maybe you have a lot of clients who pay only a small amount of money to your business each year. In this case, you’ll want to give smaller, more general items as gifts to your clients. That doesn’t mean a pen and notepad with your logo on it, or something cheap bought in bulk from Oriental Trading. This isn’t about promoting your business, it’s about strengthening that relationship you’ve worked so hard to form. Even if you’re on a tight budget for a lot of people, you can still send a thoughtful, meaningful gift.
If you’ve got too many clients to manage individualized gifts and would rather not send an actual item (inexpensive or not), a handwritten card is a genuine gift that shows your client that you care about them as an individual. Think about the message you want to convey, make it personal, express your gratitude, and hand write it. A personal message directly from you to a client occupies a larger space in their mind than a plastic yo-yo with your company name on it.
Or perhaps you have only a few clients with large accounts. In this case, you may want to invest more money in holiday gifts that show you care and value the business relationship you’ve formed.
Regardless of your situation, cost is undoubtedly on the forefront of your mind when it comes to gift giving. We’ve compiled a list of ideas, categorized by cost, to get you thinking.
Holiday Gift Giving Ideas for Clients and Employees
Gifts Under $15
- Candy, such as a small box of chocolates, peanut brittle, gourmet butterscotch hard candies, or fudge
- Refillable water bottle or insulated mug
- Page-a-day desk calendar
- Your favorite business book
- A small bouquet of flowers or holiday arrangement, hand-delivered (maybe even handmade!)
- A desk toy such as a kinetic motion toy or a clock
- A small potted plant
- A gift certificate to a local ice cream or cupcake shop
- Electronic cleaning kit, complete with microfiber cloth and cleaning spray
Gifts under $25
- Small meat and cheese tray with fine mustard or dipping sauce
- A set of personalized stationery
- Amazon gift card
- Gourmet cookies
- A subscription to a business magazine or website that interests them
- iPad case or cover
- Engraved and/or personalized pen
- Movie tickets
- A gift certificate to their favorite restaurant
Gifts under $50
- Digital photo frame
- Large box of chocolates (suitable for office sharing)
- Carry-on bag for business trips
- Sporting event ticket(s)
- A gourmet food basket
- A messenger or laptop bag
- Wrist or clip-on fitness tracker/activity monitor
Entertainment Gift Ideas
These gifts can actually be deducted 50% no matter the cost, rather than the $25 per recipient limit.
- Sporting event tickets
- Theme park tickets
- Restaurant gift cards
- Movie tickets
- Vacations/hotel stays
- Ski lift tickets
- Golf cart / green fee passes
- Play/show tickets
- Concert tickets
Keep in mind that not all holiday business gifts are created equal. You don’t have to give your $100 a month client the same gift you give your $1,000 a month client. It’s ok to send some clients cards and others more expensive gifts. Select a price range that feels right to you based on your relationship with each recipient and go from there.
The Do’s and Dont’s of Business Holiday Gift Giving
-Give. Don’t promote. You have all year to promote your business; allow the holidays to be a time to focus on your clients and let them know you’re grateful for them.
-Send a card. A handwritten card or personal email can be meaningful and memorable. Gift giving has lost its personal touch over the years and your client will love getting a special note from yours truly, with or without a gift.
-Keep an ongoing list of employees, clients, service providers, and others who make your business great throughout the year. The holidays are a busy time of year, making it easy to forget someone. Keeping a list throughout the year will ease your holiday stress and keep you from overspending at the last minute.
-Set a budget. Not all client gifts are equal, but you do need to have a budget in place before you start shopping.
-Check into a company’s gift giving and receiving policy before shipping your presents. The larger the company, the more likely a specific policy is in place. You don’t want to spend unnecessary cash on a contact who is not allowed to accept your gesture.
-Don’t wait until the last minute. Keep in mind many people take a lengthy break from work to travel during the Christmas season, so sending a gift to a client’s office on December 23rd may not work. Try to have your gifts sent out early in December to ensure on-time delivery.
-Don’t feel pressure to run out and buy a nice gift for everyone who sends you one. This is a quick way to go over budget and is not always necessary. Be sure to send a nice thank you card expressing your gratitude or a holiday card, and add that person to the list for the next year, if need be.
-Don’t send gifts that are too personal or religious. Keep it professional in the work place and avoid gifts like clothing, perfume, and other items people have personal (and sometimes very strong) opinions about.
-Don’t be a brown-noser. Give gifts because you’re grateful and keep it at that. Don’t try to out-do another employee or company, just give from the heart.
Regardless of what you actually send, clients and employees are sure to appreciate a genuine gesture that shows your gratitude for their business and service throughout the year. When in doubt when it comes to holiday gift giving, keep it simple and track expenses closely.