Once your holiday promotions are in place, your next task is deciding who to buy presents for, what to buy, and how much to spend on holiday gifts for the important people in your (business) life. Although there isn’t a limit on how many people you can give business gifts to during the year, nor on how much you spend on those gifts, your business gift deduction is limited to $25 per recipient, so choose wisely.
Here are some tips to help you shop for your business holiday gifts.
Who Should You Buy Business Gifts For?
The holidays are a perfect time to reward employees for a great year. It’s not a time to reward them as a sales incentive. Holiday gifting is different from giving a year-end bonus.
As far as clients and other businesses you partner with, gifts should only be given to those with whom you have an ongoing working relationship. If you’re bidding on a project with a prospect, it is inappropriate to give a gift. In fact, it could be seen as a bribe. Also, make sure the person is allowed to accept a business gift (some companies or government agencies forbid this).
What Gifts Should You Buy for Professional Associates?
What to buy your staff depends on how many employees you have and how you set up your organization. For example, a VP doesn’t get the same type of gift as your receptionist.
Personal gifts are fine as long as they aren’t too personal and don’t show favoritism for any employee. Personal gifts are also a great idea for clients and partners, especially if the gift references a passion or hobby of the client. Maintain notes in your CRM system on each client’s interests to give you ideas. Of course, food is always a popular holiday gift for employees and clients.
How Much Should You Spend on Business Gifts?
Because $25 is the limit you can deduct, staying close to that amount is cost-effective, especially for a small business. On the other hand, when gifting your biggest client, you might want to think bigger. Here are some good rules of thumb:
- For clients or partners that brought you $15,000 in revenue this past year, spend $100 or more on a nice business gift.
- For clients bringing you more than that in a year, $100 to $500 may be more appropriate.
- For smaller clients netting you $10K or less, spending $25 to $50 is acceptable.
Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at [email protected], follow her on Google+ and Twitter.com/Rieva, and visit her website, SmallBizDaily.com, to get the scoop on business trends and sign up for Rieva's free TrendCast reports.