Deductions
Advertising. Marketing. Promotion: Is it Tax Deductible?
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.