Is there a difference between advertising, marketing and promotion? What is PR? What is deductible? I checked several sources to find the definitions of advertising, marketing and promotion. When it comes to operating a successful business, it doesn’t matter that you have the world’s greatest mousetrap if the world doesn’t know about it. The Universal Law of Income determines how much income you will have. You will be PAID in direct proportion to the VALUE you deliver according to the marketplace. What will your income be if the marketplace doesn’t know what product or service you provide? Do you believe you have a valuable product or service? Then you need to share it with the world. ADVERTISING is the activity or profession of producing information for promoting the sale of commercial products or services. Advertisements are messages paid for by those who send them. They are intended to inform or influence people who receive them. Advertising is usually done through some type of media. That media could be print, television, radio, and social media. MARKETING is the activity and processes for creating, communicating, delivering, and exchanging offerings that have value for customers and clients. It is the action or business of promoting and selling products or services. It includes market research, advertising, selling, storing, shipping and delivering products to people. PROMOTION is devised to publicize or advertise a product or service. Promotional pieces include a brochure, free sample, poster, television or radio commercial, or personal appearance. A sales promotion shows the features of the product or service. Product promotions can also be classified as “sales” or “specials.” and may include a discounted price. PR stands for Public Relations. PR is the deliberate, planned and sustained effort to establish and maintain mutual understanding between the company and the public. Often these efforts are called PR campaign. The whole idea is to make people aware. Attract them and them induce to buy your product or service, in preference over others. If what you are doing is ordinary, necessary and reasonable, and not lavish or extravagant, for your business, then the Internal Revenue Service should have no problem allowing your deduction for advertising, marketing, or promotion expenses.. Your challenge will be to decide how you label your expense. In what category do you want to claim your expenses?  Why are you incurring these expenses? What is the benefit to your business? Your responsibility to yourself is to keep your receipts so you can prove your expenses. The IRS Examination Division is full of questions. The Tax Auditor or Revenue Agent will look to YOU for the answers to those questions. How much did you spend? When did you purchase it? How did you pay for it? If you used your credit card, your deduction is taken on the date you presented your credit card. Advertising, marketing, promotion and public relations may come at a significant investment. While the benefits may be long-lasting, the costs are generally deducted in the year they are paid or incurred. If you have questions, feel free to schedule a consultation. Send your email to nellie@ntwilliams.com.

Are you paying for your own meals while you are out of town for business? What is the purpose of your business travel? Is it to see a client? You may have an expense for your own meals and you may have an expense for wining and dining a client. Other blogs have addressed the deduction of meals while entertaining a client. Is the cost of your meals included in your seminar registration? Understand that you must keep a record of how you are determining your deduction. You can keep the restaurant receipt showing what you paid. It will often show what you ordered and whether there was more than one guest on this ticket. Business entertainment is not part of this discussion. Think about the meals you eat in a day. Breakfast? Lunch? Dinner? How much will you be spending? The cost of your meal PLUS the tip (an incidental expense) you leave your server for their good service is what you want to deduct.  Remember, lavish and extravagant are not deductible. Ordinary and necessary can be deductible. You can decide if you want to track and deduct the actual cost of your meals. Or, instead of actual expenses, you can use the standard allowance for the CITY you are in. The IRS posts this every year. The standard per diem (per day) rate for meals and incidental expenses for Phoenix, Arizona is $71. The standard per diem rate for Tucson, Arizona is $56. Smaller cities around the state of Arizona can claim $46 per day. On the days your travel TO and then back FROM your temporary business location you can claim 75% of the day’s per diem rate. So, on the day I leave for my training meeting in Tucson, I can claim 75% of $56 which is $42.00. The government is thinking I’ll have breakfast at home before I leave. They would be correct in my case. On the day I return home, I can claim another $42.00. Would I have spent the full $42 for meals and tips those days?  Maybe yes, maybe no. Whether I spend more or less, I will deduct the full $42.  One more thing – your meal deduction is limited to 50%. So I will only deduct $21. Do you need to keep receipts? The most recent tax laws state that you MUST have receipts for lodging. For other travel and entertainment expenses less than $75.00 you do not need to have the receipt. You MUST, however, keep a record showing the time, place, business purpose and amount of each separate expense. The IRS will match up the expenses you are claiming with your hotel receipt and other travel expenses, like airfare, in their verification process. Do you receive reimbursement for your expenses? If you are reimbursed in full, then you are repaid for your expenses and really have nothing left to deduct. If your reimbursement is included in your W2 income, then of course you will have income in the amount of the reimbursement you received. You will certainly want to claim the expenses if you itemize your deductions. Have I raised more questions than I answered here? The tax laws can be confusing. Email your questions to Nellie@BulletProofYourTaxes.com.

It is impossible to cover EVERYTHING on this topic, but I hope this gives you a basic understanding. . In order to deduct expenses for travel, transportation, meals and incidental expenses you must first be away from home overnight for business. . Before you even think about deducting expenses for being away from home, you must have a business purpose for that trip. What is the reason you are away from home? Is it a seminar? Is it a business meeting with a client or customer? Is it to make a presentation? Is it to seal the deal? Keep notes in your calendar and keep that calendar. .. Why keep the CALENDAR?  Why keep copies of letters sent and received confirming the appointment? The Audit Division of the Internal Revenue Service is all about proof. You must PROVE your deduction is legitimate and allowable. .. Overnight sounds easy. You have a LODGING expense. Keep the hotel BILL. It will show your lodging expense with taxes and other fees. It will show if you charged meals to your room.  The bill will also show if you charged personal (non-deductible) purchases like in-room movies or gift shop items. .. Cancelled checks and credit card statements are not enough. They show the dollar amount. They don’t have the detail about what was purchased. Your credit card statement only proves that you paid the hotel. It does not prove that 100% of that payment is deductible. The best protection you can have is your paperwork. Keep the receipts! .. If you stayed with friends or family, you won’t have any hotel bill. Will you have given them money for their hospitality? How does that compare to what a hotel bill would have been? Will they be reporting that income? Was is really a non-deductible gift? Oh, the IRS has so, so many questions. Overnight might include TRAVEL expense. Did you travel by airplane? Did you travel by train? Did you travel by car? Did you travel by ship? I book my airfare online. I keep the confirmation showing when and where I am traveling. It will tie in with the seminar dates shown on the registration form. I keep that form. If you use your car, I hope you know you MUST keep a mileage log if you want to deduct business use of your vehicle. .. TRANSPORTATION is different than travel. Travel gets you from city to city.  Transportation gets you from place to place within the city. Did you have taxi, subway, bus, shuttle, ferry or other expenses? You can’t always get a receipt for those expenses. Do you have a fare chart to show what that service charges? .. Often these expenses are paid by cash. Write down what you spent in your daily log. The IRS will look to see if what you are claiming appears ordinary, necessary and reasonable. Lavish and extravagant are not deductible. Remember, the IRS is your deduction “partner” when you claim items on your return that reduce the amount of tax you pay. .. Are you paying for your own meals while you are out of town for business? Meals and incidental expenses and reimbursements will be the topic in my next blog.  You’ll want to be sure to watch for that next week.