Giving to charity as a business

If you are the owner of a small or medium sized business and have made a commitment to helping your community, giving to a good cause is a great way to give back to the people that have supported your business throughout the year, to those in your community that are most in need, and to organizations that fit your personal as well as your business’s values. 

Giving to charity is a great way to celebrate the holidays and the start of a brand new year. You can choose to volunteer your time at a homeless shelter or a food pantry, or you can donate to your favorite charities from your business funds.

If you choose to make charitable contributions from your business to some of your favorite nonprofits, those donations can qualify for business tax deductions. However, the paperwork and tax requirements for charitable contributions can be complicated, so it’s a good idea to consult a tax advisor for advice and assistance.

Building your community

Donating to nonprofit organizations as a business has many benefits, the most important of which is connecting with your community. Giving to charitable causes is good PR for small businesses because they really depend upon the community for their continued support. And many customers will feel good about supporting a business that donates to charitable causes.

Giving to charities is also a great way to build relationships with other organizations and to network with individuals who could become future partners. Work to develop a relationship with the charities that your business supports. 

Don’t limit your contributions to the end of the year, but discuss ways that you can give back all year round by volunteering or sponsoring events to benefit the charity of your choice. As a quid pro quo, the charity could publicize your support in a monthly newsletter to its members.

If you choose to make donations to a charity or charities from your business, the charity in question needs to be a bona fide 501(c)(3) organization in order for your contribution to qualify as a tax deduction. Use the IRS search tool to confirm that your charity is registered and to confirm that you’re eligible to receive a tax deduction.

Talk to a tax professional

There are a variety of ways in which your business can donate to charity — volunteering your time, sponsoring a community sports team, launching a charity drive or event, or making a monetary donation.

If your business is giving to charity, make sure to verify that the organization is a qualified charity, that the deduction is eligible to take on your business taxes, and make sure that you understand the deduction limitations.

The Tax Cuts and Job Act of 2017 made it more difficult to claim tax deductions for charitable giving. Therefore, consulting with a financial expert for advice on how your business should handle donating to a charity makes good sense.  

GYL CPAs and Advisors provide a full range of accounting, auditing, business advisory, and tax services for businesses. Our accounting consultants take a proactive approach to providing tax services and identifying key tax planning opportunities that minimize tax liabilities for businesses.