Many companies make charitable contributions to various worthwhile organizations. Every year organizations such as the Red Cross, the Salvation Army and Kars for Kids receive general support from many businesses. Corporations can deduct up to10% of their income for contributions made to charitable organizations, as long as they are qualified organizations under IRS standards.
One of the benefits of businesses donating to charitable organizations is the fact that their donations are tax deductible. At tax time businesses should be sure to take advantage of this savings on their tax returns. Businesses do not deduct charitable contributions using the same method as private individuals. Businesses must be a sole proprietor, partnership or a share holder to utilize this deduction. If the business is a partnership or involves shareholders, the contribution will be split between the latter.
If a business makes a non-cash donation, such as a vehicle or electronics, their accountant will figure out how much of that item can be deducted. Depreciation comes into play for items that have decreased in value. The amount donated will be the amount the item would bring in the market today.
The rules and regulations for charitable contributions for businesses vary. It is best for businesses to consult an accountant in their own to find out what is appropriate for them.
It is important for businesses to remember to keep good records of their charitable contributions. If the amount is less than $250, a cancelled check or bank statement will suffice. If the amount is greater than $250, a letter or receipt is needed. If the organization or business is ever audited by the Internal Revenue Service, these records or receipts will be needed to prove their donations were made and the organization benefited from the donation.
Donating to charitable organizations is a win-win situation for the charity and the business donating.