The Art of Gift Giving
 By Alex R. Merriman

‘Tis almost the season to give business gifts. But before you take off on a shopping spree, arm yourself with gift-giving knowledge. Giving gifts affects your professional image, your small-business budget and even your taxes. Here’s what you need to know before you shop.

Tax deductions
The IRS is stingy when it comes to business gift giving. You can only deduct up to $25 per year per recipient. You may spend more, but it’s not tax deductible.

However, the deduction limit doesn’t apply to incidental expenses accompanying the gift. For instance, the costs of gift-wrapping, shipping or delivery and engraving don’t apply to the $25 limit. You can deduct those expenses separately, as long as they don’t significantly add to the value of the gift.

To get the tax deduction for a business gift, you must give the gift to a legitimate business contact. Who counts? Suppliers, customers and clients, advisors, such as tax professionals and attorneys, and anyone else you can name as a legitimate business associate.

Keep accurate and detailed records each time you give a gift. Note the name of the recipient, the business relationship, the date and the cost of the gift. Keep the purchase receipt. If the IRS ever asks, you’ll have everything you need to substantiate your tax deduction.

To find out more about tax deductions surrounding business gifts, check out IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses. It’s available free at www.irs.gov.

What to give
One size does not fit all when it comes to gift giving. Your challenge is to find items that are distinctive yet appropriate for recipients, says Tracey Turner, executive director of The Creative Group, a specialized staffing service.

“In most industries it’s best to err on the conservative side, particularly with new professional contacts,” Turner says. “Those with long-standing business relationships may have more latitude in their choice of presents.”

Here are a few gift-giving do’s and don’ts Turner offers:

• Do provide a personal touch. Gifts that relate to the recipient’s interest or hobby show that you’re paying attention. If your client is a yoga buff, for example, consider giving a book on the subject.

• Don’t give items tied to a religious holiday. For example, unless you know the recipient’s religion, it’s best to avoid Christmas- or Hanukkah-themed presents.

• Do reveal your talents. Handmade gifts, such as a framed photo you took or a candle you made, are typically well received.

• Don’t give food and drinks without thinking first. Keep in mind that some people may have dietary restrictions or avoid alcoholic beverages.

• Do consider spending time with someone. Taking a contact out to lunch can be a nice gift. Just be sure to schedule the appointment after the busy holidays.

• Don’t overlook packaging. Unique wrapping can make even a small present seem exquisite.

• Do make a contribution. If you’re at a loss for ideas, consider a donation to a well-respected charitable organization in the recipient’s name.

In lieu of – or in addition to – gifts, plenty of small businesses send out holiday cards. If you opt for cards, follow these guidelines:

• Don’t select cards tied to a religious holiday. Choose generic cards that offer greetings such as “Best Wishes” or “Season’s Greetings.”

• Simply imprinting greeting cards with your company name isn’t good etiquette. After all, the greeting isn’t coming from your company; it’s coming from you. Personally sign the card.

• For your best suppliers and clients, include a brief, personal note on the card. A few words such as “Hope you have great holidays” shows attentiveness.

When to give
The holidays are a rush of activity. The cards and gifts your company sends to business associates can easily get overlooked.

If you want to really stand out, try sending a New Year’s gift that arrives a few days after all of the traditional holiday festivities. Even cards wishing customers a prosperous New Year show your appreciation.

Small-business owners in the United States can focus on Thanksgiving gifts. It’s a nonreligious holiday and a true time of saying thanks to people in our lives, including those who help make our businesses successful.

(Posted October 2004)

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