Now that I have your attention this post is about the deductibility of meals and entertainment expenses. The key thing to remember when deducting any expense is that it must be used to generate business income. As well, only 50% of meals and entertainment are deductible in most circumstances. One exception to the rule are staff parties which can be 100% deductible provided certain rules are met.
Client lunch meetings, drinks at networking events, coffee with a potential client are all considered deductible. Paying for someoneâ€™s meal that helped your business obtain sales is an awesome gesture. It shows that you appreciate their referral. Taking your suppliers out to sporting events or shows is another way to build a valuable businesses relationship that could lead to greater customer service and maybe discounts.
It is very important to keep all of your receipts and document the reason for the meal or entertainment expense. Tools such as Receipt Bank or Hubdoc can be used to extract the data and store your receipts.
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