With the holiday season upon us many business owners may be asking
"What do I need to know about employee gifts?"
Employee gift giving has become a thing to be expected in a lot of businesses today. Employers have come to expect a holiday bonus, or some other personal gift. This expectation has it's benefits of course. Employers who give during the holiday season tend to have employees who work harder, especially during the holiday season. They do this because they feel a sense of appreciation.
That holiday bonus or gift goes a long way for company moral. After all, your employees are the face of your company.
With that said, you have made the business decision to show your appreciation to your employees. So now you are faced with the difficult decision of how exactly you can do that, without hurting yourself.
First, you need to look at your companies financial situation.
- This is something you should have been anticipating throughout the year.
- Also, budgeting for year after year.
Second, ask yourself what is taxable and what is not.... Let me give you an example:
- You give a turkey to each employee
- this is NOT a taxable gift
- You give a grocery store gift card
- this IS a taxable gift
Cash or "cash in kind" gifts are typically considered a business expense. Where as an actual "physical item" is typically not.
An important note, rules and restriction can differ based on business entity. I suggest you consult with your tax expert, bookkeeper, or IRS. gov publication 463 for business entity clarification.
