An important part of being successful in any business is being able to network. Meeting new clients, contacts, and potential future co-workers/employees is essential for any business to stay fresh, relevant, and be healthy enough to grow. But networking can be costly. All that wining and dining ain’t free!
At Hacker Accounting, we know which networking expenses you can deduct. Here’s how you can write off your networking expenses.
Related: Can I Deduct My Wardrobe?
You can deduct some of the costs of traveling for your networking. Keep track of your mileage. Write off the costs of subways, public transportation, or a portion of the costs of the wear and tear on your car. You may also write off tolls and parking. Also, you can write off air travel, provided it is ONLY for business reasons.
If you’re networking while traveling abroad, you’ve got the opportunity to take advantage of some deductions. Anytime you have to pay a surcharge for connecting, you can count that fees towards your miscellaneous deductions. This includes hotel phone calls or coffee shop internet access.
Sometimes we have to network to find a new job. The good news is that these expenses are deductible, with a few caveats. First and foremost: You can NOT deduct any expenses if this is your first job, or you’re attempting to land a new job in a new industry. However- if you’re looking for a new job in an industry that you’re already working in, you CAN make networking deductions. You can deduct the cost of clothes if they’re necessary for job interviews, you can deduct the cost of meeting lunches and the costs of printing resumes and mileage for traveling to interviews and networking events.
Meals & Entertainment
This is the big one. When it comes to networking, few things work as well as “wining and dining”. You can deduct certain meals and entertainment events & experiences, provided that they are considered “ordinary and necessary”. This is the benchmark that all business-related deductions has to hit. Are these expenses considered common and accepted in your business? Is this expense something that is helpful and appropriate for your trade or business?
One way to gauge whether or not a networking expense is appropriate for deducting is it to consider whether it passes a “directly related” or “associated” test. A directly related expense is a meal or form of entertainment that is directly related to a business activity. This could be something that they do as part of a business networking intensive, or a meal held during a corporate retreat with your staff.
An associated expense is something that is done to help continue existing business relationships or generate new businesses. If you’re deducting a meal, for example, it would have to occur directly before or after a major business discussion or activity.
What Are Some Examples Of Things That I Can Deduct?
What we have here is by no means a comprehensive list of deductible networking expenses. This is just to give you an example of the type of things that you COULD deduct, provided that they are ordinary and necessary for your business. These include:
- Meals delivered on site to the workplace as part of a meeting or networking event.
- Mentor lunches.
- Items you treat as compensation to an employee that they substantiate by their W-2. These can include incentive trips, performance awards, club dues, certifications and special training.
- Overtime work meal expenses.
- Recreational or social activities done primarily for the benefit of employees, business partners, and clientele.
- Company picnics.
- Holiday parties.
- Professional sporting events.
- Tickets to charitable fundraising events
- Client or customer entertainment
- Golf outings
Got more questions about how you can write off networking expenses? Give Hacker Accounting a call at 602-375-5251.