Connecting with Customers during the Holiday Season

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.

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