Hey, guys, happy Wednesday. We’re going to hop on with a little business quickie about meals and entertainment because this is a tricky area for a lot of business owners. I know everyone wants to write off every meal possible that they ever have as a business expense and, unfortunately, can’t always do that.
The significant change came a couple of years ago. 2018, all the tax reform made the entertainment part of meals and entertainment not deductible. Sorry. So if you used to get courtside tickets and fun trips and whatever for your clients, well, unfortunately, now none of that is deductible. Meals are still deductible, usually 50%, But there are some instances where we can get a 100% deductibility.
So, for example, if you treat your entire business to lunch or dinner or something like that, that’s what we usually call employee morale, not meals and entertainment, and I think you only have to have half of your staff present to get that. So even if it’s not 100% participation, you would still be able to deduct a considerable portion of those meals. So that’s awesome.
And then, I think it was thanks to Cares Act; we have a little boost for 2021 meals from restaurants; I don’t know where else you get meals from… I don’t know; maybe you can’t have a meal at a gas station or something. I don’t know. I don’t know precisely what they mean by that, but your meals usually come from restaurants. Those are 100% deductible, trying to help the restaurant industry out, trying to help those small businesses on both sides, the small businesses going to the restaurant, the small business that owns the restaurant, trying to help everybody out a little bit.
So no entertainment, right? I like to say no more strip clubs. Sorry, guys. It means Florida. It’s a thing here. There are no deductions for entertainment, meals probably 50%, possibly a hundred, depending on how you structure it. Talk to your accountant, keep good records. If you’re paying for stuff, make sure you keep a receipt and write down who was there. What did you discuss? The amount, the date, usually those things come on the receipt anyway but make sure it’s all covered, and that way, we will try to get you the best deduction possible for your meals but not entertainment.
Well, that’s it for this quickie, and we will see you next time.