Business Entertainment Expenses Tax Inform

Topic 512

Entertainment expenses that are both ordinary and necessary in carrying on a trade or business may be deductible if they meet one of the two tests discussed in Publication 463.

You must have records to prove the business purpose (under the applicable test) and the amount of each expense, the date and place of the entertainment, and the business relationship of the persons entertained. For further information on record keeping, refer to Topic 305.

Generally, only 50% of food and beverage ("meal") and entertainment expenses are allowed as a deduction. For exceptions to the 50% limitation, refer to Publication 463, Travel, Entertainment, Gift and Car Expenses.

If you are an employee whose deductible business entertainment expenses are fully reimbursed under an accountable plan, the reimbursement should not be included in your wages on Form W-2 (PDF) and you should not deduct the expenses. If you are not reimbursed under an accountable plan, your expenses exceed the reimbursement you received under an accountable plan, or you are not reimbursed, use Form 2106 (PDF), or if you meet the conditions, Form 2106-EZ (PDF) to report business entertainment expenses. These expenses, including expenses that exceed the reimbursement under an accountable plan, are carried over to Form 1040, Schedule A (PDF), and are generally subject to the 2% of adjusted gross income limit. Refer to Topic 508 for more information on the 2% limit, Topic 305 for more information on record keeping requirements, and Publication 463 for a definition of accountable and nonaccountable plans.

If you are self–employed, use Form 1040, Schedule C (PDF), or Form 1040, Schedule C-EZ (PDF), or if you are a farmer, use Form 1040, Schedule F (PDF) to deduct these expenses.

For more information on meal or entertainment expenses, refer to Publication 463

 

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How to Create an Entertainment Business Plan

Step One

Establish the basic outline of your business. For an entertainment company, for example, you would want to include the initial services you'd offer as part of your business model, such as party music, DJs and costumed characters.

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Step Two

Create milestones within your business plan. These milestones should indicate when you would hire new employees, when you would add new services or choose to upgrade to new and better equipment. When you write these milestones out you are making it easier to track progress and focus your business's energy in a specific direction.

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Step Three

Write your budget into your business plan. This is especially important for when you are looking for investors for your business. With a clear budget it's possible to see how ambitious your business model is, and makes it easy for potential investors to see both how organized you are and how effectively their money would be spent.

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Step Four

Put your business plan in writing and make it as presentable as possible. If this means spending a few dollars to build a customized portfolio with graphics and card stock paper, do it. The more professional it looks, the more people will take your entertainment business seriously.

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Step Five

Update your business plan whenever the scope of your business changes. If your business is thriving and new technologies become available or new service options become predominant in the marketplace, feel free to make changes to the plan and incorporate new and fresh ideas.

 

 

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John kellogg

John Kellogg is an entertainment attorney, performer, and Assistant Chair of the Music Business/Management Department at Berklee College of Music. He is also a practicing lawyer, who for many years represented the R&B group The O'Jays, and who currently represents singer Gerald Levert as well as emerging artists. Kellogg also performed and recorded with the R&B/funk group Cameo before attending law school.

John Kellogg, Professor of Music Business/Management at Berklee College of Music, discusses matters of strategic interest to anyone starting out in the music industry, whether on the music or the business side. He addresses what the industry is likely to look like tomorrow and how that will change who gets paid and for what, how to use new media methods to get your music to your fans, how to network in the industry effectively, when you need a lawyer, and how to protect and monetize the songs you worked so hard on writing.

http://entertainmentebusiness.blogspot.com/

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