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Tis’ the season of giving. As the holidays arrive, so does the desire to donate to charities.

Below we’ve gathered the following small business tips and guidelines for charitable giving:

  • Why businesses should consider donating
  • How to choose charitable organizations
  • How to make sure donations are tax-deductible

Why Small Businesses Should Consider Donating to a Charity

Donating to local charities is a great way for small businesses to demonstrate their connection to their community.

Let’s face it, most small businesses are dependent on their community for their success. Showing that you care about local causes helps to connect your business to the community.

Local giving is excellent for your local PR. Plus it’s beneficial for the local charities that are making a difference in your community.

As a bonus, many local charities will publicize your support on their social media platforms and newsletters.

How to Choose Charitable Organizations to Donate To 

If you’re a small business, chances are local charities will seek you out for donations. While there are benefits to making contributions to several charities, it’s a good idea to put your time, effort, and energy into organizations that match your values and interest.

Consider connecting your business to a local charity as opposed to a national organization.

Consider finding an organization that makes sense with your brand.

For example:

  • Real estate office could connect with a homeless charity
  • Restaurant may consider working with a food bank
  • Outdoor recreational business could support an environmental cleanup organization

Take the time to learn about the organizations. Find out what their true needs are and how your business can help. Not just for the holidays, but year-round.

For example:

  • Does the charity need event sponsors?
  • Do they need volunteers?
  • Do they need ongoing financial support?

Another consideration in choosing a charitable organization might be ensuring your giving is tax-deductible.

How to Make Sure Charitable Donations are Tax Deductible 

There are tax benefits when donating to charities. However, there are rules on whether donations are tax-deductible.

As with most tax deduction questions, it’s a good idea to speak with a tax advisor about charitable deductions.

Below, we’ve provided frequently asked questions on what makes charitable donations tax-deductible.

How Does Charitable Donation Tax Deductions Depend on Your Business Type?

How you claim charitable deductions depends on how you’ve set up your business.

Corporations can include their charitable donations on their income tax returns. However, this does not include S corporations.

Owners of businesses that are not corporations would make their deduction through the personal portion of their tax returns.

What Types of Donations Can a Small Business Deduct from their Taxes?

Businesses can deduct the following donations:

  • Cash contributions
  • In-Kind contributions through gifts of property or equipment
  • Mileage and travel expenses incurred when working with a charitable organization
  • Supplies purchased and used while volunteering

It’s important to document your giving throughout the year as proof of your donations.

What Types of Charitable Donations Cannot Be Deducted by Small Businesses?

Your time spent volunteering for a charitable organization cannot be deducted. This includes time spent by your employees as well.

What Types of Charitable Organizations Can a Business Donate to for Tax Deduction Qualification?

In order for a donation to be tax-deductible, the charity needs to be an IRS recognized 501(c)(3) organization.

What are the Limitations for Business Tax Deductions for Charitable Donations?

According to the IRS, limitations on deductions for charitable donations are 50 percent of adjusted gross income computed without regard to net operating loss carrybacks.

The 50% rule applies to the following types of charitable organizations:

  • Public charities
  • Private operating foundations
  • Private foundations that distribute donations to private foundations
  • Private foundations that distribute donations to public charities within 2.5 months from time business donations were made
  • Private foundations that pool contributions to pay to public charities

Contributions to certain types of private foundations are limited to 30 percent adjusted gross income computed without regard to net operating carrybacks. These organizations may include:

  • Veterans organizations
  • Fraternal societies
  • Cemetary organizations

How You Could Use Our Services for Charitable Donations

Finding a qualified charitable organization to connect your business with may take the time you don’t have. A virtual assistant firm like Business Solutions Unlimited can help you search for the right organization plus find out what needs they have.

If you’d like to explore the benefits of using a virtual assistant firm for this as well as many other tasks, give us a call at (904) 429-4588 and let us get to work for you.