Are you wondering what exactly can be deducted on your small business taxes? Well, we are not, tax professionals but we have done our due diligence to provide some insight into this matter.

We have some good news!

According to the IRS, yes, marketing expenses are tax deductible. The government allows you to deduct expenses that help you bring in new customers and keep existing clientele. 

However, it is important to note that as a business owner you can only deduct the costs of marketing efforts directly related to your business activities. 

Below we have compiled a list of possible tax deductions:

• Social Media Advertising

• Search Engine Advertising

• Cost of Banner Ads (excludes political websites)

• Advertising in various media like newspapers, TV, internet, cable, and magazines

• Public Relations and promotional expenses (i.e sponsorship of sports teams or promotional items like mugs, t-shirts, and pens.)

• Influencer Marketing (may require 1099 contracts depending upon the amount)

• SEO Services

• Email Marketing

• Print advertising materials such as business cards, brochures, and web pages. 

• & more

Here's a list of things you can NOT deduct:

You may not deduct costs that are primarily personal, even if they may have some promotion value. 

• Personal Hobbies (even if business associates are involved) ​

• Advertising expenses associated with research and development activities. 

• Ads on Vehicles. The cost of placing the ad on the vehicle is deductible however, the cost of operating or driving the vehicle is not an advertising expense. Read more about what the IRS says about ads on vehicles here. 

• Advertising as an Indirect Political Contribution. Political expenses are not deductible for businesses.  

• Donations to charities or non-profits are not an advertising expense. However, these expenses may be deductible in other areas of your business or personal tax return.  

Where to Deduct Advertising Expenses on Your Business Tax Return

So we've discovered your business can deduct costs for your marketing and advertising efforts, but where do you input these deductions? Well, this depends on your type of business, see below:

Sole Proprietorships & Single-Member LLCs

• Sole proprietorships and single-member LLCs, advertising expenses are recorded on Line 8 in Part II- Expenses of Schedule C. For our accounting, tax, and bookkeeping needs we use Collective. Check them out and use this link to get your first month free!

Partnerships and Multiple-Member LLCs

• Partnerships and multiple-member LLCs record their advertising expenses in Line 20 in the Other Deductions section of Form 1065: Partnership Income Tax Return.

Corporate Tax Return

• Corporations filing a Corporate Tax Return report advertising expenses on Form 1120: Corporate income tax return on Line 22.

Read more about Advertising Expenses in IRS Publication 535​.

We encourage you to consult with your tax professional or read more about advertising expenses in IRS Publication 535: Business Expenses for any additional questions.