From weddings to corporate galas, event planners have plenty of ways to keep busy throughout the year. Planning parties might seem easy — a couple of binders and some great ideas and you're good to go — but the reality is that much more goes into arranging a truly successful event. Promoters work hand in hand with their clients to ensure a successful event, which means lots of travel time, phone calls, software purchases, business dinners and much more. Luckily, many of these expenses can be deducted from your income taxes if you’re working as an independent professional.
1) Home Office Expenses
Unless your company becomes large enough that you need to hire employees to take on more events and end up opening a traditional business office, you are probably working out of your home. Event planners who have a dedicated home office space can deduct it on their taxes. Deducting a home office can be a bit tricky, so it is important to understand the guidelines set forth by the IRS for doing so.
Most importantly, the space you claim on your deductions must be for business only. If you use your laptop to work on your couch, or if you have a desktop computer set up in your kitchen, you will not be able to claim a home office on your deductions. Instead, use a spare bedroom or another dedicated space in your home as your office. Your deduction is based on the square footage of that space. Because you'll need to prove the room is only used as a home office if you're ever audited, it helps to take a photo of the setup to keep in your records.
In addition to deducting the room itself, you can also claim equipment and portions of your utility bills. This means you need to keep records of your reference books, computers, printers, software, office supplies, and bills like your mortgage, heating, electricity, internet and cell phone.
2) Travel Expenses
Event promoters do a lot of traveling to meet clients, attend the parties they've promoted and much more. For this reason, it's important to keep track of travel expenses. The most common travel deduction is mileage, but it’s important to track it carefully and know the rules. You can only deduct mileage related specifically to business, which means detailed logs are the best way to handle this expense. If you do a lot of travelling, it’s helpful to use apps like Everlance, which track your mileage and
Imagine you leave your home at 7:00 a.m. and don't get home until 7:00 p.m., but you're doing both business and personal traveling during that time. You can't track the mileage from your home to dropping the kids off at school, but you can track it if you head directly from the school to a business meeting. However, if you stop to run a personal errand between school and the meeting, you can only track from the errand to the meeting. Now you see why detailed logs are so important.
In addition to vehicle mileage, you can track other types of business expenses as well. Are you flying to a special event out of state, or did you take a cab to a client meeting? Do you need to rent a car, pay for a hotel or rack up meal expenses while on an event-related trip? Each of these expenses is tax-deductible.
3) Industry Education
Event planners must keep on top of new trends in their industry if they want to keep creating successful parties and events. For this reason, industry education is not only important but tax-deductible. Education includes conferences, online webinars, business classes, books and e-books, special workshops or mentoring. In addition to specific education expenses, you can also deduct things such as subscription fees for event-related periodicals.
4) Marketing and Advertising
Marketing your business is a huge part of becoming a successful party planner. At a minimum, you must have a website, which requires paying for a domain name, hosting and, possibly, someone to design and maintain your website. Other marketing expenses include online advertising, such as on Google or Facebook, print advertising in local newspapers or at local events, photoshoots, business cards and more. When you keep a detailed account of what you use as your advertising methods and how much they cost, you'll be able to deduct part or all these expenses on your taxes.
5) Business Insurance
Like any business owner, event promoters need business insurance policies to protect themselves and their companies. The types of needed policies vary depending on the company and its location, but there are several policies that should never be skipped.
General Liability Insurance – A general liability policy protects you and your business in case a client or one of his or her partygoers is injured or otherwise has a bad experience and decides to sue. It will help to cover any legal costs or other costs associated with the problem. Keep in mind that different clients or other businesses that you work with may want you to include the insurance in the contract.
Professional Liability Insurance – General liability is limited in what it covers, but professional liability coverage protects you in case you're sued for negligence because the client feels you did not fulfill the requirements outlined in a contract.
Business Equipment Insurance – This is especially important for protecting your home office equipment. Home insurance policies do not cover business equipment if it is damaged by a fire or stolen during a home invasion, so never skimp on this policy.
In addition to these three policies, you should consider purchasing a business vehicle policy if you have a car used only for your company, and if you have employees, workers' compensation insurance will likely be a requirement. Regardless of which policies you choose, you may be able to deduct their premiums on your taxes. However, the act of deduction business insurance policies can be tricky, so hiring a CPA to help you during tax season is a good idea.
Event planners have a lot on their party plates, but understand deductions makes running a successful company that much easier. Of course, the first step should always be insuring your business. If you are looking for excellent business insurance, consider the many options available at Bunker.
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Do you want to learn more about the various types of insurance you can purchase for your barbershop or hair salon? To select from available coverage options and learn how much your insurance premiums will cost, get a free, personalized insurance quote from Bunker.