Charitable Giving Tax Deductions for Small Businesses

As a leading CPA firm in Lincoln, Nebraska, Bryant & Associates, P.C. knows that tax time can be confusing for many business owners. As we enter the new tax season, many small business owners start thinking about the best ways to give to charitable organizations. In fact, around 75% of business owners on average choose to donate at least some of their profits to charity. If you’re one of these, but are wondering about the potential benefits and ramifications of charitable giving on your business’s bottom line, we here at Bryant & Associates are here to walk you through some of the finer points of tax deductions for charitable giving.

First of all, choose the right charity

Not every charity you donate to will qualify you for a tax deduction, so if getting a deduction is a main part of your goal, it’s best to do some research on your chosen charities before you donate. Tax benefits aren’t the only business-related reason to donate, though—charitable giving can align with your overall public relations strategy, or there can be added value for your business through non-monetary donation, say a volunteer project or fundraising drive that your employees participate in. These can be great morale and team-building initiatives that do more for your business than simply donating money.

No matter how you decide to donate, the important thing is choosing a method and recipient charity that aligns with your business goals and lets your employees and customers know what kind of company you are.

Now focus on the deduction

Again, you should do some research to figure out which charities you donate to will qualify you for a tax benefit. If you have detailed questions, you’ll want to consult with a local CPA firm such as Bryant & Associates which has the knowledge and experience to guide you through the charitable giving process. Here are some general guidelines to follow:

  1. Find an eligible charity: a 501(c)(3) is usually your best bet. You can find eligible charities easily using this handy search tool furnished by the IRS.
  2. Make a qualified donation: this usually includes things like cash, volunteer services, event sponsorship, or donation of your small business’s inventory.
  3. Know that each category is different, with its own set of limitations: this step can make things a bit confusing. For example, you’re not allowed to deduct the value of volunteered service, but you can deduct the value of supplies you use in the act of volunteering. Information about these deduction limitations is available from the IRS.
  4. Pay the donation by tax year’s end: in addition, you’ll need to report donation information by filing Form 1040, Schedule A.
  5. Take your deduction: realize, though, that the IRS has placed a limit on the amount of charitable giving that is eligible for tax deduction (50% of your adjusted gross income).
  6. Keep documentation: if by chance the IRS audits you, you’ll be glad you kept records of your charitable donations. Usually an organization will provide you with a written statement that confirms your contribution.

Contact Bryant & Associates Today at (402) 423-0404!

At Bryant & Associates, P.C., our firm of accounting specialists can help you make sense of your small business finances. From bookkeeping to payroll, tax services to business consulting, we offer a broad array of accounting services designed to help you manage your business more efficiently, so you can spend your time and energy on growing your business. Contact us today at (402) 423-0404 and let’s get started!

Scroll to Top

Client Login Portal