As a business owner, you probably will use advertising to help build the reputation of your business and sell the products or services that you are providing. You should be aware that you can deduct most advertising expenses because they are related to your business operations, as long as the advertising is not used to influence legislation. Some common forms of advertising expenses include ads in newspapers, magazines, and trade publications, as well as ads online or on radio and television. Less obvious business expenses that also would be classified as advertising include catalogs and brochures that you produce, any signs or billboards that you buy or rent, business cards for your employees and you, and any costs of retaining advertising professionals. Advertising to attract employees does not technically count as advertising expenses, but you can still get a deduction for these ads because they are part of the ordinary and necessary expenses of your business.
Any website for your business can be deducted as a business expense, regardless of whether you actually sell products or services through it. You can deduct fees for creating and maintaining the website.
Advertising to Build Goodwill
Goodwill advertising is meant to improve the reputation of your business. It may include sponsoring a minor sports event, holding a contest for consumers, or calling for consumers to contribute to charities or causes. To be deductible, goodwill advertising must be reasonably related to business that you expect to receive from building your goodwill. Deductions apply only to actual financial expenditures, rather than non-tangible time and effort that bolster your goodwill.
You cannot deduct more than $25 in business gifts per person per year. There is an exception for identical, widely distributed items in giveaways that cost $4 or less, if the name of the business is clearly and permanently imprinted on them. Some common types of giveaway items may include calendars, magnets, clothing, pens, and various accessories. If you give away an object to another business to use on its property, this is not considered a business gift.
If you use a sign that is reasonably expected to last for less than a year, you can deduct the cost of the sign as part of your business operations. If the sign is reasonably expected to last for more than a year, it will not qualify for a deduction as part of your business operations. You still may be able to deduct the cost of a permanent or long-term sign under Section 179. In some cases, you could apply the deduction to a single year, but often you would need to spread it as depreciation over multiple years. Read more here about how Section 179 works.