Many business owners think that anytime they entertain a client, be it at a sporting event, dinner, or a round of golf, that that expense is fully deductible. And while there are situations where those expenses can be deducted, there are certain requirements to meet in order for the cost to qualify for the deduction.
Business – This should go without saying, but business must be done for a deduction to count. If you take a client to a baseball game with every intention of selling a new product, but it never comes up, and instead you talk sports and family the whole time, then that is not deductible. But by discussing a client’s relationship, a new product, a contract, or something along those lines, you have met this requirement.
Attendees – Depending upon who is at the event, there may be a limit to how much of the expense is deductible. If, for instance, you host a party for clients and prospects, you may be limited to only writing off 50% of the …Read More