For a new company, categorizing things can be confusing. Are business cards office supplies or advertising tools? Do they fall into tax deduction categories?
In this article, we will give you a straightforward answer.
Office Supplies And Advertising Expenses
Office supplies are ordinary, tangible things that are essential and helpful to operate your business. The Internal Revenue Service also defines office supplies as current assets, which are things that you need to replenish often, usually within a year.
Office supplies are, but are not limited to:
- Business cards
- Binders, notebooks, sticky notes, writing utensils
- Mailing supplies
- Binder clips, paperclips
- Rulers, staplers, tapes
- Paper plates, paper towels, bathroom tissue, and soap
- Cleaning supplies
You read it right. A business card is an office supply. It is among the things that you use to run your business, not to make products. Materials you purchase to create a product are calculated into the cost of goods sold on your tax return.
Business cards are regularly used by employees to transact business with potential clients and partners. You use a business card to communicate with customers and vendors to advertise your company.
There’s another keyword – advertise. Is a business card an advertising tool? Yes.
Advertising tools are anything visual or audio that reaches your target audience to explain what your company does. It increases customer awareness.
Other advertising tools and strategies are:
- Flyers, brochures
- Newspaper and magazine ads, radio and TV ads
- Social media, email marketing, website
Are Business Cards Tax Deductible?
Yes. Business cards as office supplies are tax-deductible. In the same way, the cost of printing business cards is tax-deductible as an advertising expense. As long as these are directly related to your business, these can be deducted from your taxes.
IRS defines tax-deductible expenses as ‘ordinary, necessary, and reasonable’ expenses or ‘helpful and appropriate’ expenses that help businesses earn income. These expenses are subtracted from your company’s revenue to lessen your tax liability.
As stated in Section 162 of the Internal Revenue Code, standard business deductions include general and administrative expenses, such as office supplies, business-related travel and entertainment, automobile expenses, and employee benefits, such as retirement and pension plans.
Always make sure that you keep track of your expenditures. Good record-keeping is key to the process of claiming allowable tax deductions. Authorities could disallow even legitimate expenses that are not supported by business records.
So have solid record-keeping to pay your taxes right and on time.
Asking a simple question as “are business cards office supplies or advertising tools?” has led you to learn some basics in tax deductions. Remember that tax-deductible expenses are ‘ordinary, necessary, and reasonable expenses.
To help you out with the details of managing your tax liabilities, you may consult a professional, who can also help you file your small business tax returns.
Understanding tax categories is vital in proper business management. It will help you maximize deductions and minimize obligations according to the provisions of the law. Your willingness to learn about even the smallest things is proof that you are serious about your business. Keep it up! Find out more about office supplies here!