Charitable giving can be a significant part of a business’s tax strategy. Not only is it a great way for business owners to give back to their communities, but they can also use it to lower taxable income and improve their brand image.

Rules Around Giving for Businesses

There are many rules surrounding making charitable donations for businesses. The biggest thing to understand is that charitable donations to nonprofits are almost always tax-deductible. You can make multiple types of donations, such as cash donations, sponsorships, and other types of equipment purchases. These all give you flexibility in deciding how you want to spend your money to help the cause you wish to. You also have to understand which forms will be needed to properly document the donations you have made. It will all depend on the type of corporate structure you have. This is why Sam Haskell is such an important person in his community. He understands the importance of donations and how they can affect his local area.

Making Sure the Charity is Real

Before you can make a donation, you have to scrutinize the charity you are giving the money to. They can’t do anything that could jeopardize their tax-exempt status, or you might end up not getting the tax benefits you want. The most important rule regarding tax-exempt businesses is the rule on lobbying. Tax-exempt businesses have strict rules governing what they can and cannot do in terms of lobbying. You might think you are giving money to a good charity, but you will end up causing your business to be audited. Making sure the charity is legitimate will save you a lot of time and effort in the future.

Make Sure You Can Take the Deduction

As mentioned above, taking time to scrutinize the nonprofit organization is critical to benefit from your charitable donation. You can only donate about 50% of your adjusted gross income per year. That means you might not get as much benefit as you thought, depending on how much money you decide to donate. You also have to be conservative when it comes to categorizing some other things as donations. For example, the work you do as a volunteer for a nonprofit organization can be tax-deductible, but you have to be reasonable in how much money you try to deduct. It makes the most sense for you to consult a tax expert like what Sam Haskell did.

Keep Accurate Records for the IRS

The other thing you have to remember is to keep detailed records of your charitable giving. This will help you if you ever get audited in the future. It will also help you do calculations and see if the charity you are donating to is not doing what they are supposed to with your money. Ensuring that the charity is actually putting the money to good use is a huge part of the giving process.

Benefit 1 – Less Tax Owed

The main benefit is the money you donate to charity can be subtracted from your taxable income. This is best done when you are really close to being in a lower tax bracket. Donating the difference to charity will not only help you give back to the community, but it will also help you pay a lower tax rate. By doing this and many other strategies, you can save a bundle on your taxes.

Benefit 2 – Higher Morale for Workers

Donating to charity will help the morale of your workers. There is nothing you can do to improve the mood of the office, like the feeling that you are truly helping people. You can choose a great charity that all the workers believe in and then donate a significant portion of your spare income.

Benefit 3 – A Higher Profile

A significant portion of charitable donations could land you on the news. Donating to charities is a great way to improve your profile. This is something that Sam Haskell talks a lot about. He understands how important it is to have a good profile in your market. He also understands that this is an essential part of doing business in today’s world. Talking about your donation is a great way to improve social media reach.

Benefit 4 – Customers Will Love You

Customers will also show a liking to you when they know you are donating a significant portion of your money to a worthy cause. Customers will also trust your business more, as they will think of you as more moral and ethical.

Benefit 5 – You Will Feel Better

Depending on the charity you choose, you will feel a lot better about yourself by giving. You will come to work with positive energy, and you will also be more motivated to earn more money for your business to give away to charities.

Wrap Up

Giving money to charity is of the best ways for business owners to lower taxable income and improve all aspects of their lives. If you aren’t doing it, you should start right now, so you can reap the multiple rewards available.