What Advertising Costs Can My Business Deduct?

While in the past, small business owners mostly looked to print, television or radio, flyers or attending a trade conference to get their message out, today, advertising opportunities have become almost limitless.

The older types of advertising were, and still are, difficult to gauge the direct effect of their use, and they were costly. Except for time, today, many advertising methods don’t cost anything.

For example, you can create accounts on numerous social media websites that your target market likely frequents. By posting interesting information regularly, you will develop a following. You can also buy ads on social media sites and target specific visitors, so your message isn’t getting lost on someone who doesn’t fit your client base. You can create a website that you can optimize so search engines present it to those searching for what you are selling. Email newsletters are an effective, targeted method of connecting with buyers. With all these advertising methods, it is easy to scrutinize your efforts’ effectiveness.

Most costs for advertising and promotion are deductible, as outlined here.

Advertising

In accounting, this generally refers specifically to actual ads on or in media such as:

• Print publications, television or radio
• Ads on social media sites such as Google, Facebook, Pinterest, Instagram, Tik Tok, etc.

Websites:

As a website is an advertising tool, the costs to set up and maintain it are considered marketing or advertising. Items usually include:

• hosting and development, including website builders like Squarespace
• SEO, or search engine optimization
• The cost of domain names
• Email like MailChimp

Promotional Material

Several costs can be included to promote your business like:

• Business cards
• Logoed items such as pens, coffee mugs or T-Shirts
• Printed materials that you might deliver or mail to potential clients
• Product samples

Trade Shows and Conferences

Being in direct contact with your audience is a valuable method of establishing credibility and gaining exposure. Costs associated with conferences can be:

• Renting space such as a booth
• Travel costs related directly to attendance for both owners and employees

Creative Services 

Third-party services may include:

• Logo design
• Graphic design of marketing materials
• Software such as Canva or Photoshop

Other Marketing Costs

• Signage created for use on-site at your business
• Outsourcing management of social media costs such as subscriptions
• Commissions to incentivize others to promote or sell for you
• Brand development costs
• Subject to specific exclusions, meals and entertainment costs 
• Gifts for clients are deductible based on certain criteria (see our earlier post)

Finally, your accounting records should reflect the proper marketing and advertising costs breakdown. To obtain help tracking your expenses, contact our office, and we will walk you through it.