Tax law changes that will impact your business

Some details may have gotten lost in the noise of the tax law change. Entertainment expense is no longer deductible.  You will need to assess the value of your entertainment spending in light of the changed law.  Meals, however, remain 50% deductible.  If your business tracks these two expenses in a single expense category you should split them to facilitate tracking.  Please note this is very low hanging fruit for tax auditors, easy to find and easy to train someone to look for.

The second area is membership dues. Memberships for any club organized for business, personal, recreation or other social purpose are no longer deductible.  Excluded dues include those for entertainment activities, health or fitness clubs, country clubs or golf clubs. But you may continue to deduct dues for professional organizations and those organizations that you can show are necessary to conduct your business.  These may include Chambers of Commerce, Boards of Trade, civic and public service organizations, such as Optimists and Rotary, trade associations and business leagues.  The key is that the membership must be meant to promote your business.  The purpose and nature of the club’s activities are the determining factors that the IRA review.


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