Is Holiday Shopping a Business Expense?
Updated: Jan 27, 2022
People living in America spend almost a whopping $850 Billion during the holidays. These shoppers include small business owners, entrepreneurs, professional athletes, high net worth individuals and entertainers or, as we like to say, our clients.
Is Holiday Shopping a Business Expense? by Marley JD Watkins
So, the burning question…is holiday shopping a business expense? The answer to this very simple question may surprise you! Put simply, “it depends”. For a “simple person” the answer is no. An individual cannot use holiday shopping as a valid business expense, regardless of what holiday they are shopping for or celebrating. And, if you think about it, that makes sense. Individuals are buying gifts to be generous, show love or pay respect. It is a personal decision and a personal - not professional - expense.
However, as an LLC, S-Corp or any other Legal Business Entity (“LBE”), gifts are probably one of the most effective ways to market and develop business. Many large corporations routinely use gifts during the holiday season to reward their most valued customers. In fact, it is expected that they will. Think wine baskets, gift cards and even trips. And if large corporations are doing it, all business entities should be! Small, solo, medium and everything in between. So YOU (yes you!) should be doing the same! Entrepreneur. Athlete. High net worth individual. LLC Owner. And who are your most valued customers? Family and Friends. These are the people who talk about your business the most. These customers are usually the front line of your business. They promote you and your company at school, at the hair salon, at their jobs, online, on social media and on and on. Your network is your net worth. Therefore, each and every gift you give out during the holiday season is and should be recognized as a legitimate business expense as either marketing or business development. This is one of the many beneﬁts of having an eﬃcient corporate structure and utilizing legal business entities to run your business (and your life!).
In conclusion, for simple individuals, giving gifts to family and friends is NOT a legitimate business expense. However, for structured entities, giving gifts to clients is the number one way to market and grow business and it costs money. Money that is not lost and should be accounted for. Remember your network is your net worth, make it and the money spent work for you.
Simply Structure, LLC is a boutique consulting company focusing on providing Eﬃcient Corporate Structuring "ECS" to: small business owners, high net worth individuals, entrepreneurs, professional athletes and entertainers. With ECS our clients can 1) Maximize proﬁts, 2) Preserve wealth, 3) Protect assets and 4) Minimize liabilities.
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*Simply Structure, LLC and its affiliates do not provide tax or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax or accounting advice. You should consult your own tax and accounting advisors before engaging in any transaction