Deductibility of Advertising

If you own a small business, you can deduct advertising and marketing expenses from your income. The expense must have the goal to keep existing customers or bring in new customers. The cost must be ordinary and necessary to be tax-deductible. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business.

Reasonable advertising expenses that are directly related to your business activities are deductible. An expense for the cost of institutional or goodwill advertising that keeps your business name in public view with the expectation of gaining new business is deductible. If you spend money providing entertainment, meals, or a recreational facility to the public as a means of promoting goodwill and advertising in the community, it can also be deductible.

If you spend money to influence the government or a political party or advertise in a publication with the intent to influence a political party or candidate, this is not a deductible expense for your business.

If you’ve been presented with a marketing opportunity and want to know if it’ll be deductible, schedule an appointment with The Bottom Line to get expert advice.

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