What the Meal?!
There’s a lot of buzz out there about the tax reform. Overall, from what we’ve seen, it’s going to benefit most all of our clients. We’ve done some ‘high-level’ calculations and have noted significant drops in tax liabilities across the board.
However, you, like myself and most of our clients, own a small business. As owners, we will often take liberty on the business’s spendings: picking up the bar tab for ‘business’, buying late-night meals for employees as a thank you for their efforts, and even write-off ski passes as entertainment because we’ll ski with potential clients throughout the year.
These liberties are going to change in 2018. No longer are most of these purchases tax-deductable.
Here’s a quick summary of the changes on the most common ‘meals and entertainment’ deductions we see with our clients:
Entertainment: 50% in 2017 now 0% in 2018
Tickets to charity events: 100% in 2017 now 0% in 2018
Employee travel meals: 50% in 2017 now 50% in 2018 (no change!)
Meals provided for employer convenience: 100% in 2017 now 50% in 2018
Office holiday parties: 100% in 2017 now 100% in 2018 (no change!)
What does this mean for you? Consider the character on WHY you spend your meals and entertainment budget:
– Is it for employee morale? Does it truly generate standing relationships and income? Does it align with your bigger plans? If so… Keep it up. Just know these purchases won’t reduce your taxes like they did before 2018.
– Do you tend to pick up the tab simply because it’s a write-off? Did you buy a season ski pass because you’ll save on taxes? Are you more liberal with your entertainment budget because it reduces taxes? If this is the case, stop doing it. You’re not going to get a tax break from these items anymore.
We preach fiscal responsibility. Be intentional. Be strategic. Make sure everything you buy has a purpose. Refrain from impulse buys and make profit a priority.