J.K. Lasser's Small Business Taxes 2023

CHAPTER 15Advertising Expenses

• Ordinary Advertising Expenses
• Promotion of Goodwill
• Prizes, Contests, and Other Promotional Activities
• Help‐Wanted Ads
• Websites and Apps
• Social Media

Alert

At the time this book was published, Congress was considering tax changes that could affect 2022 tax returns and planning for 2023. Check the online Supplement in February 2023 at www.jklasser.com or www.BigIdeasForSmallBusiness.com to see what changes have been enacted and when they become effective.

You may run advertisements on websites, in newspapers, on the radio or television, or in magazines or trade journals to sell your products or services. You can deduct these costs, as well as the cost of other promotional activities. At the same time, you will discover that some costs cannot be deducted or that certain costs need to be deducted as another type of business expense.

For further information about deducting advertising costs, see IRS Publication 535, Business Expenses.

Ordinary Advertising Expenses

Like all other business expenses, advertising costs must be ordinary and necessary business expenses in order to be deductible. They must have a reasonable relationship to your business activities, and they must be reasonable in amount. However, there are no guidelines on what is “reasonable” in amount.

Deductible advertising expenses include the costs of:

• Business cards
• Ads in print or the media (such as newspaper or magazine advertisements, charitable organization publications, ...