Learn More About How Your Hotel Holiday Party May Be Tax Deductible
So you're planning on renting out a hotel conference room for a business party but are afraid of the expenses. Never fear! There's a good chance that your party may be tax deductible! This is true of parties thrown in hotel conference rooms or even those thrown on business premises. How do these tax deductions work?
How Much Of My Party Will Be Deductible?
Although many small-time business owners don't realize it, employee entertainment is often considered an important morale boost for employees. And the IRS looks fondly on businesses that are taking good care of their employees. That's why they have created deductions that allow up to 100% of your business parties to be deductible.
That's right – everything from party food to renting a hotel conference room for the party may be written off as a business expense. But everything must be carefully itemized via receipts in order to ensure that your deductions are accepted. Even then, your hotel Christmas party or summer party may not qualify if you don't follow specific rules.
How Do I Ensure It's 100% Deductible?
To ensure your party is 100% deductible, you must make sure that:
- All business parties are for employees and their families
- The party isn't "lavish or extravagant"
- Everyone is invited
- All costs must be documented
Essentially, your party must be "reasonable" to your business and your business needs. A "reasonable" party is one that doesn't seem designed to spend excessive money to entertain a select number of people in the firm. There isn't really an exact guideline, such as reasonable cost investment, but common sense dictates that a reasonable holiday party will:
- Not include clients or customers, as it must be thrown to acknowledge employees, not raise business
- Invite everyone in the firm, as purposefully excluding anyone makes it a private party
- Include family-friendly events to encourage employees with children to attend
- Not hire high-priced entertainment options, such as private singers or dancers, as it will then pass over into "lavish" territory
- Be held in a reasonably inexpensive venue, such as a hotel conference room
Remember that breaking the above guidelines can be costly; while you may still be able to deduct a private party of the top executives in your firm held in a privately rented ski resort, only 50% of your costs will be covered.
Why Should I Hold It In A Hotel Conference Room?
Hotel conference rooms are large, which makes it easier to invite a large number of people to the party. They are also usually relatively inexpensive, meaning they're more likely to fit the "reasonable" cost investment. Holding a business party in a hotel conference room helps avoid the "exclusionary" feel that can push your party out of the "100% deductible" bracket. The best part about holding a holiday party in a hotel conference room? You can rent rooms at the hotel for your employees to stay at, should the party get a little too wild.
Now that you understand business party tax deductions, feel free to rent a hotel conference room like those offered by Clarion Hotel - Seattle International Airport and start setting up a party your company will never forget! Just remember to keep things under control: hotel damage bills caused by a raucous party are definitely not deductible.