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How Small Businesses Can Keep Inventories Fresh and Save on Taxes With Charitable Gift Giving
from:Even if your business isn't actually dealing in cars, many small businesses rely upon fleets that can be maintained, partially, through charitable gift giving to IRS-sanctioned non-profit organizations (NPOs). This allows you to not only take what may be a significant tax break, but also gives you a valuable outlet for keeping the fleet fresh.
Consider, for instance, what effect going down a tax bracket can have on your business or corporate tax return. Donation and charitable gift giving is potentially very rewarding, even if it is of cars worth less than $500. If you're in a position to donate several of $500 autos in a given year, you could not only take all those deductions but also, such gift giving could result in your paying a smaller overall tax on your now much smaller income.
Even if you only have one or two vehicles, as many small businesses do, you can still donate that car to a charity that will use that vehicle directly (as opposed to selling it on the wholesale market) and claim the fair market value for your gift. Giving to charity that has use for a vehicle may be used to deliver meals, given to a needy family, or used by your local police department.
In fact, charitable gift giving can represent a large number of organizations that are exempt from taxes according to the IRS. Any NPO goes through some rigorous standards to gain tax exempt status. Of course, you should double check to find out that any NPO that you're considering donating to
Small businesses and the self-employed are the most likely to benefit from tax deductions in general, since they are already in the habit of taking itemized deductions. Also, the presence of other deductions one is able to claim enough on deductions to lower the percentage of tax that they pay, sometimes significantly if many capital investments to your business have occurred in the same year.
As such, when you choose charitable gift giving, you're able to deduct the value of the donated car but also, the amount of the new car or truck you've purchased to replace it. This additional amount of deduction is often enough to make a real difference in the amount of tax owed at the end of the year, even though deductions are made from the business income line.
If you maintain a fleet of vehicles or go through them very quickly, it may be helpful to establish a set of protocols by where you automatically begin whatever replacement procedures you normally use, but also consider facilitating charitable gift giving that is likely to benefit you and the charity in question to the greatest extent.
For small, local businesses, it's often best to find smal, local charities that can actually find real people to drive the cars you've donated rather than a service that simply takes the cars away for wholesale auction. You'll be able to declare a much higher amount – often as much as 10 times higher. Gift giving within your local community also allows you to form valuable partnerships that will allow you to really look good to your potential customers.
There are no regulations on bragging rights, other than those you agree to with the charity in question. Consider the NFL and the United Way as an example of such a mutually beneficial partnership based upon volunteerism as well as charitable gift giving.
The practice of charitable gift giving is not only a good option for people with old clunkers in the yard. The changes that made it more difficult to claim more than $500 in deductions for many individuals make it very easy for small businesses with one or more company vehicles to benefit as fully as possible from charitable gift giving. There are plenty of local charities in most places that can use a vehicle that still runs, even if it does have a bit of wear.
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