If you own or lead a business and you are planning to host a party or picnic for your employees this summer, you are probably simply hoping it will be a fun way to bring your staff together. But, you may also be able to take a large or full tax deduction for the expenses related to the gathering.
Deductible Expenses
Typically, your business is limited to deducting 50% of allowable meal and entertainment expenses. But some expenses, like those associated with your summer party or picnic, are 100% deductible. This includes meals, recreation, social activities, and entertainment at the summer or holiday party or picnic you are holding for your employees. But, to qualify for the 100% deduction, your entire staff has to be invited. They don’t have to attend, but all of your employees must be given the opportunity to come to the party or picnic.
Here are a few other examples of expenses that may be fully written off:
- Food, water, and coffee provided at your business for employees
- Meals provided at your business to more than half of your employees as part of working extra hours, weekends, or holidays
- Food or beverages provided to the public for promotional purposes
Tracking Expenses
Ready to move forward with your summer party or picnic? There are a number of IRS requirements, including certain records you’ll need to keep to prove your expenses are 100% deductible.
You must be able to prove:
- Amount of expense
- Time, date, and place of expense
- Purpose for expense
- Who benefited from expense (employees, public)
You will find your company can reduce its tax bill by accounting for, and properly documenting, all expenses that are 100% deductible.
If you would like more information about deducting business meals and entertainment related to a summer party or picnic for your employees, including how to be sure to take advantage of the 100% deduction available to you and your business, contact us today.
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