A Guide to Charitable Donations for Small & Big Businesses
Corporate philanthropy is about more than limiting your tax burden. Giving to organizations in your community can serve as a form of invaluable PR, raise awareness for your services, and—yes—limit your tax obligation. But how much should you give? To whom? How can you gently spread awareness of your actions?
At Leadingham Rodgers, we’re all about helping business owners give back. In this guide, we’ll walk you through some basics about charitable giving in your community, and what guidelines you should follow as you go about making a difference to your employees, your customers, and your community.
Why Make Charitable Donations?
We would all love to support our community and help build a better world for future generations. Of course, in today’s economic climate, the thought of giving money away may seem unfeasible. But charitable donations may be more than meets the eye for your business.
By giving to good causes and non-profit organizations in your community, you’ll receive a wealth of benefits in return, including positive press and increased awareness of your brand through sponsored events. Getting involved with a good cause also provides employees with a reason to take pride in the company, creating a shared sense of culture, satisfaction, and goodwill.
Today, 70% of consumers want brands to show social responsibility. Corporate philanthropy can do just that, becoming a significant part of your brand ethos. Perhaps the cherry on top of charitable donations is that it doesn’t have to be a financial burden.
Who Should My Business Give To?
Start by brainstorming causes that align well with your business, your employees, and your customers. Corporate philanthropy does not have to be limited to your area, which is why many companies combine local campaigns with national and international charity work. Ultimately, you can do good for the community and your business while essentially distributing your taxes directly to the organizations that you care about. Charitable giving is an excellent way to involve all of your employees when choosing an organization your business is passionate about.
Then, think about the legal side. According to Federal Government regulations, charitable deductions only count if they are made to qualifying charities with 501(c)3 status. Essentially, charities must meet government requirements to receive donations from businesses, so you’ll want to make sure your charity of choice qualifies.
What Types of Charitable Giving Can We Do?
Though there are many limits to charitable deductions following 2017’s Tax Cuts and Jobs Acts, there are many ways to donate, and many ways to structure charitable giving from a tax liability standpoint. To qualify from a tax standpoint, donations can be given in a multitude of ways:
- Monetary donations, including credit card, check, and cash payments
- Donations of vehicles, goods, property, or other equipment
- Donations of time and travel to help in a volunteering capacity
Whether you decide to sponsor a local sports team, set up a charity drive to donate goods, or organize a company-wide volunteer day, our tax advisors can help you choose a way to give that makes the most sense for your business.
How Can My Business Make Charitable Tax Deductions?
Corporate philanthropy can have a positive impact on the future of your business for many reasons, but you need to understand the financial aspects, too. Charitable deductions will limit your tax burden, meaning they won’t have to put your business in financial difficulties. But, you have to keep a few guidelines in mind to see that relief realized.
While there are several additional rules to understand, one of the critical factors is that corporations may deduct qualified charitable donations that amount to 25% of their taxable revenue, although any excess can carry over to the following year’s tax returns. A certified public accountant is knowledgeable in these rules and regulations and can help your business decide who to give to and how much.
Accounting For Charitable Deductions
If you choose to give to charity, don’t let it cause complications to your company’s finances. Recording your donations needs to be done correctly to receive the beneficial tax deductions. Likewise, you need to be aware of the limitations on eligibility and limits. Our team at Leadingham Rodgers can provide you with qualifying charities and handle filing your tax deductions so you can focus on what matters most.
Make a difference in your community and your business with the help of Leadingham Rodgers Certified Public Accountants!
Receive the Benefits of Charitable Donations with the Help of Leadingham Rodgers
At Leadingham Rodgers, our Certified Public Accountants are here to advise you in all things tax planning, including managing your charitable donations. Our team proudly serves the Montgomery area in philanthropic planning so your business can do the right thing, the right way. Don’t hesitate to get in touch to take the first steps of charitable donations by calling us at 334-721-2548 or contacting us online!