For many small business owners, one of the perks of having your own company is the opportunity to contribute to causes in which you believe. Charitable giving has many benefits including tax deductions, marketing opportunities, and employee engagement. To make the most of your charitable giving, make sure to follow these guidelines.
Choose the right charity
In order to qualify for a tax deduction, your chosen charity must be approved by the IRS.
Not all donations qualify for a tax deduction. Cash or checks are deductible with proof of the donation. Volunteered time, whether your own or your employees, is not deductible, however, if you incurred expenses, such as supplies, while volunteering, those are deductible. You can also deduct travel expenses, including mileage, as long as you didn’t travel to the location for any other reason besides volunteering. Donations of goods or services are tax deductible.
Deductions are limited to 50% of your gross income, however, some donations are only deductible from 20 to 30 percent. Consult your accountant or CPA for details. Keep in mind that all donations need to be paid in full by the end of the year.
Be sure to keep detailed records of your donations. The charity or nonprofit should provide you with a letter acknowledging your donation A canceled check isn’t enough for the IRS to approve the donation.