Painting business owners can deduct employee appreciation events like barbecues and trips as business expenses without triggering payroll taxes, unlike cash bonuses which count as taxable wages. Monthly or quarterly team experiences strengthen morale while saving money on taxes.
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How can you use your business as a vehicle to do some fun things, but also get some work done and do that in a way that is optimized for tax savings? Why might we want to do something like this? We're doing a yearly event, or maybe it's not going to Cancún, maybe just like doing a barbecue, a monthly barbecue, quarterly barbecue, or something on a recurring basis with your team instead of maybe doing bonuses or something like that.
The most important reason is to build those friendships and those relationships with, with your coworkers. That cannot be understated. If you take care of your employees, your employees will take care of your customers. Show that appreciation and have that team building is very important. Doing that in a way that is most tax-advantaged so that we are getting the most for our money. If you are able to budget a certain amount of money to show employee appreciation, your first thought might be, well, everybody loves cash. Anytime an employer gives an employee cash or a cash equivalent, such as a gift card, a bonus in the paycheck, that is considered to be taxable income by the IRS. And it's not just income tax, it's also payroll taxes. It needs to be reported on their W-2. You can kind of maximize your budget is by not giving cash, but rather by giving experiences. Entertainment, food, trips to Cancún, these are things that can be written off 100% and they are not subject to payroll taxes. They are not subject to income taxes as long as it is a part of some kind of like bona fide employee appreciation.
