Marketing: 100% Tax Deductible

October 22, 2018

One of the most thrilling phrases in the English language is “guilt-free spending,” and the fourth quarter is when it happens for many marketing departments.

If you have money left in your advertising budget for 2018, spending it before the end of the year enables you to lay the groundwork for generating strong business results next year while maximizing your tax deduction for the current year.

That will make your tax advisor happy, since pulling expenses into the current year is one way to offset taxable income — an especially useful strategy in a “good” year for the company. Advertising and promotional expenses are 100 percent deductible, but keep in mind that the IRS requires them to be reasonable and directly related to your business activities. This includes efforts designed to attract new business and retain existing customers.

IRS allowable marketing expenses include:

  • Fees paid to your agency to develop and execute marketing materials and strategies.
  • Copywriting for advertisements, blogs, newsletters or social media.
  • 100 percent of any direct mail campaign, including printing and postage.
  • All printed marketing materials, including, flyers, brochures, magazines and trade show materials.
  • Websites, microsites and landing pages, including design, development and hosting.
  • Advertising expenses, including newspaper, magazine, television, radio, social media, outdoor and Google Ads / PPC.
  • Videos production for use on your website, social media or email marketing.
  • Register for a conference.

Jim White, certified public accountant and tax partner at BDO in Jacksonville, tells us, “While the new tax law eliminated the deduction for entertainment expenses, it didn’t change the deductibility of marketing expenses.” As a result, he suggests that companies may want to shift money away from pure entertainment as well as meals, which are limited to a 50 percent deduction, and use it instead for a comprehensive marketing program that is fully tax deductible.

Of course, to really make your spending guilt-free — and make the executive suite happy — you’ll want to ensure it’s part of an effective marketing strategy. That could mean prepping your sales message for January or investing in new landing pages. It could also mean trying out a messaging bot you’ve been thinking about or taking advantage of end-of-year advertising inventory by negotiating a sweet deal.

Some additional ideas include:

  • Start creating content now in preparation to kick off 2019 with fresh videos and blogs.
  • Begin strategizing, generating enthusiasm and putting building blocks in place for a new lead generation approach for your sales team.
  • Test and measure a trackable and totally new (to you) advertising vehicle — and perhaps discover a new lead gen platform that outperforms your 2018 tactics.

So while you’re focused on the finish line for 2018, make sure you’re preparing for an even better 2019 with some guilt-free Q4 spending.

Jan Hirabayashi

Jan Hirabayashi

Managing Partner

Jan Hirabayashi founded BroadBased in 1996 and is the company's managing partner and lead marketing strategist.