Want to throw a great business holiday party for your employees? We all want to show our appreciation to our employees during the holidays and having a great party is one way of doing that. But is your holiday party deductible?
It’s just about the holiday season. And as a business, you may be thinking about what type of events you want to have to connect with your employees and spread holiday cheer. And company parties can happen throughout the year. Summer picnics are big events for a lot of companies. What companies usually ask us is,”what are the parameters that I need to do this so that I get the best tax benefit?”
Are Holiday Party Expenses Deductible?
Now to answer the question, is your holiday party deductible? Generally speaking, the costs for these events, food, beverages, entertainment, are all deductible for your business. And it doesn’t fall under the same rules as when you take out clients or other business professionals for business meetings. You don’t have to have a business purpose for this event, as long as you’re inviting all of your employees and their guests, whether it’s a significant other or family, then it’s fully deductible.
It also doesn’t have to be an in person event. With everything that’s happened over the last few years, virtual events are now happening and with businesses having remote workforces, people in all different places, you can have an online event where maybe you ship the food and beverages to every employee’s house or tp where they’re working out of. All those costs are deductible.
When we were in COVID lockdown, like everybody else, there were some virtual events that we did personally for ourselves, like cooking instruction and wine tastings. Those were fun events to have, that you can incorporate into your business as a holiday party or other special event for your employees.
The Benefits of Throwing a Holiday Party
The cost of these events can be pretty significant. And the cost depends on what you’re wanting to do and how many employees you have. But it is a nice way to provide a benefit to your employees. It can boost employee morale and it gives employees the chance to get together and have some time that is not business related to get to know one another. The intangible benefits of having these types of parties or these types of events goes a long way to help solidify those relationships within the organization. I’ve always enjoyed these holiday parties.
So we say go ahead and do that party and have a little fun with your employees. It can be a great benefit to your employees as well as to your tax number. And if you’re interested, we have a masterclass where you can learn the three big financial mistakes new business owners make and what to do next.
