The Entrepreneur Forum | Startups | Entrepreneurship | Starting a Business | Motivation | Success
  • NOTICE! The forum software is currently being upgraded. During this time, the forum may have intermittent downtime, specific functions may not be available, and/or the user interface may look different.

How Do Advertising Deductions Work?

Accelerate wealth. Build a business that pays freedom. Join more than 70,000 entrepreneurs and register for the Fastlane Entrepreneur forum. Remove ads? Join the INSIDERS.

Process

Silver Contributor
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
Jul 19, 2017
273
593
253
Solving Pain
I’ve run into a few people who write off their ads. One client off mine says he writes ads off 100%. This was surprising, I thought most deductions are only 20-30%..

Many people don’t Know this at all it seems. some sources say Ads are a 100% write off.
One would think Cardone would be in deep shit given how high profile he is.

what is the truth?
 
Don't like ads? Remove them while supporting the forum: Subscribe to Fastlane Insiders.

Process

Silver Contributor
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
Jul 19, 2017
273
593
253
Solving Pain
No tax experts here who can chime in?

(I don’t trust internet blogs and gurus)
 

Johnny boy

Legendary Contributor
EPIC CONTRIBUTOR
Speedway Pass
May 9, 2017
1,424
6,763
1,477
25
Washington State

"Whether you call it advertising, marketing or promotion, you can deduct expenses that help you bring in new customers and keep existing clientele."
 

Rabby

Platinum Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Summit Attendee
Speedway Pass
Aug 26, 2018
1,564
4,647
1,133
Florida
Advertising is just an expense, like payroll or manufacturing costs. Assuming you're talking about income tax deductions, why would you be taxed on any expense, advertising or otherwise? Expenses are not taxable income. Taxable income is generally what's left of your business income after the necessary costs of business are paid.

A few things have limitations, at least in some jurisdictions, such as meal expenses that you would personally have whether or not you had a business. But if you had no business, would advertising costs be part of your cost of living, like food and water?
 

Process

Silver Contributor
Read Millionaire Fastlane
I've Read UNSCRIPTED
Speedway Pass
Jul 19, 2017
273
593
253
Solving Pain
Advertising is just an expense, like payroll or manufacturing costs. Assuming you're talking about income tax deductions, why would you be taxed on any expense, advertising or otherwise? Expenses are not taxable income. Taxable income is generally what's left of your business income after the necessary costs of business are paid.

A few things have limitations, at least in some jurisdictions, such as meal expenses that you would personally have whether or not you had a business. But if you had no business, would advertising costs be part of your cost of living, like food and water?

@Rabby so can someone use ad budgets as a tax write off?

As in they owed let’s say 50k in taxes on profit of 150k, if they spend 40k or something does that deduct from? I’ve heard from some they deduct that 40k and pay the 10k in tax. I’m curious if that is legit or not.


@Johnny boy I’ve read that source too, I never trust anything from a single blog. I’m hoping to hear from entrepreneurs in this forum how much they write off.

also I’m hoping to hear from a few tax accountants/experts. I have a meeting with my tax guy next week.
 

MitchC

Gold Contributor
FASTLANE INSIDER
I've Read Rat-Race Escape!
Read Millionaire Fastlane
I've Read UNSCRIPTED
Summit Attendee
Speedway Pass
Mar 8, 2014
719
1,230
385
150k
50k tax is 33%

what you do is take 40k away from 150k
110k
33%
roughly 33.33k tax instead of 50k.

Income 150k
Expenses 40k
Net profit 110k
33% tax 33k
 

Johnny boy

Legendary Contributor
EPIC CONTRIBUTOR
Speedway Pass
May 9, 2017
1,424
6,763
1,477
25
Washington State
I write off 100% of marketing and advertising. Everything I spend on the business is a 100% write off except for stuff like food which is like 50% or something like that.
 

Rabby

Platinum Contributor
FASTLANE INSIDER
Read Millionaire Fastlane
I've Read UNSCRIPTED
Summit Attendee
Speedway Pass
Aug 26, 2018
1,564
4,647
1,133
Florida
@Rabby so can someone use ad budgets as a tax write off?

As in they owed let’s say 50k in taxes on profit of 150k, if they spend 40k or something does that deduct from? I’ve heard from some they deduct that 40k and pay the 10k in tax. I’m curious if that is legit or not.


@Johnny boy I’ve read that source too, I never trust anything from a single blog. I’m hoping to hear from entrepreneurs in this forum how much they write off.

also I’m hoping to hear from a few tax accountants/experts. I have a meeting with my tax guy next week.
The thing to understand is that your advertising costs are deducted from your gross income, not from your tax liability. This is true of all "tax deductions" ... it's how they work.

So if your business income was $150,000, and you had 40k in advertising expenses, 20k in payroll expenses, and 80k in product costs, you would have:
Gross income: 150,000
Expenses: 140,000
Net (taxable) income: 10,000

Your tax liability would be your tax rate times the $10,000.

There are a few things that may result in tax credits rather than deductions. Advertising is not one of those things. Tax credits, unlike deductions, are subtracted from your tax liability.
 

Sponsored Offers

  • Sticky
MARKETPLACE  Freelance University: Solve Every Freelance Problem (Especially on Upwork)
FU. 4 DAYS. 50% OFF BLACK FRIDAY SALE! If you're an Upwork freelancer, you'd be a fool not to...
  • Sticky
MARKETPLACE  NEW: The Best School for Going Fastlane (50% Off Deal Now On)
Just added in some more bonus courses so now up to 4... We have a full super detailed...
  • Sticky
MARKETPLACE  You Are One Call Away From Living Your Dream Life - LightHouse’s Accountability Program ⚡
One year ago, I was just your average software developer who always consumed content about...
  • Sticky
MARKETPLACE  For Sale: Food Brand with 4 Years of Happy Customers in a Fast-Growing Niche
So to get certified, it cost a fortune? How much exactly? That sucks that these "health...
MARKETPLACE  Fox Web School "Legend" Group Coaching Program 2021
Fox's Web School helps you learn a specialized skill which you can use to get to Fastlane. It's...
MARKETPLACE  Not sure how to start? This free book will teach you how to build a successful web design business
Hi Fox. Starting the book and got through the introduction. Had a conversation with Andy Black...


Don't like ads? Remove them while supporting the forum. Subscribe.

New Topics

Fastlane Insiders

View the forum AD FREE.
Private, unindexed content
Detailed process/execution threads
Ideas needing execution, more!

Join Fastlane Insiders.

Top Bottom