At this time of the year it is customary for many businesses to thank their customers for their patronage. According to an American Express OPEN Small Business Holiday Monitor survey, 44% of businesses plan to give their customers or clients gifts this year (down slightly from 47% last year). Here are some ideas to help you make appropriate choices:
Be as generous as you can afford.
Survey respondents reported that spending for customers would average $740 this year, compared with $455 last year.
Caution: For tax purposes, you are still limited to a write-off for business gifts of $25 per customer (the same limit that applied in 1962!).
Even if cash is tight, don’t underplay customer loyalty. Reward valued customers, even if the gift is only a small gift basket or a bottle of wine. A calendar bearing your company name may seem old-fashioned, but may still be appreciated.
Make contributions in the customer’s name.
Instead of giving a specific item, consider offering customers a choice among three charities to which you will make a donation in the customers’ name.
This has the added benefit of being fully deductible to the extent otherwise allowed. For example, a C corporation’s deduction for charitable contributions is limited to 10% of its taxable income.