Now is when many business owners think about holiday giving to their team and community. A thoughtful approach to generosity can bring warmth and happiness to your business, employees, and the local community.
There are three areas to consider: charitable donations, employee gifts, and community partnerships.
Creating Positive Change Through Charitable Giving
We naturally feel good about supporting a charitable cause that is dear to us. There is also a strategic side for business owners who approach holiday giving thoughtfully. Consider the following:
Select Tax-Deductible Organizations
Some contributions are tax-deductible when donating to an organization with a 501(c)(3) status. Maintain records or receipts of the donation for accounting and tax documentation.
Align Contributions with Company Values
Selecting causes that resonate with your mission will add depth to your brand. When a company supports local schools, health and environmental initiatives, it strengthens its reputation and fosters a sense of unity and shared mission among its employees.
Set a Budget
A dedicated budget for charitable giving ensures donations are organized and manageable. Consider designating a percentage of your annual revenue to stay within budget.
Employee Appreciation Without Tax Complications
Appreciation for your employees shouldn’t be limited to the holidays. Holiday giving can boost the morale of your team. Here is how to manage holiday gifting effectively:
Understand what is taxable and non-taxable to employees.
Generally, cash bonuses, gift cards, and large-value gifts are taxable income for employees. However, some benefits may not be taxable.
Think beyond material gifts.
Consider giving a benefit that offers value throughout the year. Wellness incentives or professional development opportunities are practical and may be non-taxable.
Stay on top of compliance.
When you gift your employees, be careful not to choose something that may be taxable. Your gift should benefit them, and you also need to be sure it meets your budget constraints.
Foster Community Partnerships
Local businesses welcome the support of their community, especially during the holiday season. Your support of local businesses helps the communities’ economy and creates valuable connections. It also benefits your business with increased visibility and a positive reputation.
Partnerships with Local Vendors
By using local vendors for holiday events or gifts, you can strengthen community ties and your commitment to supporting small businesses. This is a win-win for the employees and your regional partners.
Carefully Track Expenses
As with everything in your business, expense tracking is essential. If your expenses directly serve your business, they can often be categorized as marketing expenses and may be tax-deductible. Examples of partnerships might include hosting a holiday market or community event.
Encourage Employees to Shop Locally
Offering discounts to local vendors and shops is a simple and effective way to help your employees and the community.
Think about how your holiday giving can genuinely matter to your employees and the local community. You can remain financially savvy while supporting charities and strengthening community bonds.
Before making a final decision on holiday gifting, be sure to consult with your tax accountant.
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