Planning on deducting the cost of entertaining your next client at a football or baseball game? How about your next golf outing with clients this summer?
Not so fast! Starting in 2018, business owners are no longer able to deduct the cost of entertaining existing or potential new clients under the Tax Cuts and Jobs Act.
Business meals continue to be 50% deductible, yet business must be conducted at the meal and the cost of the meal cannot be lavish or extravagant. Employee meals that were previously 100% deductible now are subject to a 50% limitation if they are:
- Provided on employer premises to the employees for the convenience of the employer
- Occasionally provided to the employees for weekend work or overtime
- Office snacks and beverages provided to employees on business premises
- Part of a package for a charitable sports event
Due to changes made in the treatment of meals and entertainment, it’s especially important you document all expenses – including amount, time, date, place, business purpose and business relationship of persons entertained.
Consider adding the following categories to your chart of accounts in QuickBooks to accurately classify expenses:
- Entertainment expenses (non-deductible)
- Entertainment expenses (100% deductible)
- Entertainment-related meal expenses (non-deductible)
- Business meal expenses (50% deductible)
- Other meal expenses (100% deductible)
Could you benefit from a review of your existing chart of accounts in QuickBooks? Have questions or simply need someone to look over your shoulder?
Contact us for help!