Benefits and how to make money

shroomgirl · #1 12-29-2003, 07:33 AM

St. Louis like any other town has an incredible amount of non-profits and charities that raise their monies with events that normally revolve around food...Which menas that they have the caterers bid on doing meals, parties at a "discounted rate....I've worked a bunch in the past few years where I have taken a hit on the rentals or given food discounts...whatever, so How do you work it so that You get the tax deduction for the amount you would normally charge ....Michael Roman has touched on this in a couple of his seminars...I just want to know if you let the "committe" relize what a DEAL they are getting and in some cases you are donating more than the head sponsors.

phatch · #2 12-29-2003, 09:20 AM

I wonder about the donation during an audit.

There is your cost not including profit, your actual cost for the affair.

There is the amount you're being compensated, if any.

And there is what the shindig would normally cost.

As far as donations in kind go, you could only claim your cost minus any compensation, as I understand it as a layman. That's not a very attractive or functional way to run a donation that doesn't put that money in the charity's coffers

However, if you talk with your accountant, you might be better off claiming it as a business loss, a deal that didn't pan out as anticipated. Not sure on the details there or how precisely legal it is. How you structure it makes all the difference in tax law.

My accountant is my business's best friend.

Phil

Peachcreek · #3 12-29-2003, 09:22 AM

Earlier this month we donated our restaurant space for a local Christmas holiday event where we had kids coming in to make gingerbread houses. The function was staffed by volunteers, they provided the supplies, we supplied food samples for the adults. I charged for a room cleanup fee, my labor cost and food cost, so I broke even. On top of that, we were the remote location for a radio station, had two television crews, and two weeks of free press and TV advertising. We made the 10:00 news on two stations and a mention on another.
A week before that I hosted the reception for the local symphony after the performance of their Christmas concert. Appetizers for 150, they pay me $350.00 (does not cover my food cost, let alone my labor) and I donate the rest ($1000+). I can easily recoup my expense on caterings that I book as a spin-off of getting my little towns' 150 upper-middle class symphony patrons. Its all good.

shroomgirl · #4 12-30-2003, 06:33 AM

There are always those benefits that make sense even if it is not your charity of choice, whether they provide PR through promoting the event and theuse of your services or you are able to regain in future gigs what you spent putting their party on....(the last one does not work for me much anymore) I will always support causes that are near and dear to my heart that make sense for me to support. BUT as I recall there are ways in which you get the full rate and then cut a donation check that makes more sense all the qay around.ANY accountants out there?

kuan · #5 12-30-2003, 02:58 PM

Say your rack rate is $1,000. You charge the 403c $1,000. It's business as usual for you. They get to write off the $1,000 as an expense. Then you cut them a check for $600 which is tax deductible for you. At the end you get back say $200 from that $600. You're left with $600 net since that $400 was an expense and the balance of $200 is a refund or tax you wouldn't have to pay anyway. So the 403c actually pays $400, and you really only $400 out of pocket.

Edit: That's if it actually costs you $1000. If you spent $400 then you're actually up $200.

Kuan

panini · #6 12-30-2003, 05:53 PM

we always invoice for the retail less the donated amount and write it off

kuan · #7 12-31-2003, 07:33 AM

Actually talked with someone about this last night. General advice is you don't want to mix business and personal expenses so don't do the quid pro quo method. Instead, allow them to pay whatever they can. Invoice them as normal then the actual dollar value of the payment. Tag the balance as a donation.

Get them to write you a donation slip. This should be the amount for the value of goods and services you've provided. Sometimes they even let you fill it in yourself. Don't fill in like a million dollars, that would probably get you a visit from your friendly IRS auditor.

Kuan

shroomgirl · #8 01-02-2004, 02:03 AM

That's what I thought....has anyone gone through Michael Roman's seminars on this....his catering advice is in most instances RIGHT ON. I need to get the tax deduction form from the last benefit, seems like they don't really appreciate the donation if it is in food/services as much as if it were a check.Thanks Kuan!