Why marketing is a great year-end tax write-off

Before I became obsessed with entrepreneurship and developing businesses (whether my own or someone else’s), there was a time when I spent the majority of my days performing risk management and insuring businesses as an insurance agent. At one point in my career, I insured nearly 300 businesses including contractors, restaurateurs, manufacturers and other business professionals. While it may sound boring to some, I absolutely loved it — and still love the insurance business to this day.

At the end of each year in the insurance world, agency phones start ringing with clients calling about new equipment and new vehicle purchases. When I first started out in the industry, I didn’t realize what was happening. (Truth be told, I think I was probably just more excited that new equipment purchases meant a few more dollars in my pocket from higher insurance premiums.)  I quickly figured out what was going on after noticing a year-to-year trend of new equipment purchases at each year’s end. It became obvious that business owners were making equipment purchases to avoid paying taxes on their profits and cutting a check to Uncle Sam.

In addition to avoiding big tax payments, business owners also purchase new equipment for another reason: They want to invest in their business. Buying new equipment means the ability to increase output and perform better and more efficiently than before.

My experiences with insuring businesses taught me a lot about general business practices over the years and when it comes to end-of-year investing, one lesson I learned was clear: Business owners, especially at the end of the year, want to find ways to save money on taxes as well as invest in things that help them grow. In that light, I’ve got another write-off that business owners and CMOs need to strongly consider: marketing. It’s not just a good end-of-year write-off. It’s a brilliant end-of-year write-off.

Marketing: A Brilliant Write-Off

Each year, without fail, the slowest weeks at Lift Division are from mid-November through December. Business owners constantly insist on pushing meetings back into the new year. Perhaps CMOs and business owners alike are affected by some sort of holiday siesta syndrome in this sense? Whatever the reason, this makes little financial sense to me.

Just like in the case of my insurance clients who were purchasing equipment, the end of the year couldn’t be a better time to invest in marketing for two main reasons. First, with few exceptions, marketing and advertising investments are 100% tax deductible, unlike some equipment purchases that aren’t eligible for 100% deductions (and instead have depreciation schedules). Literally every dollar invested in marketing can be effectively written off. So from that perspective, investing in marketing as a write-off certainly makes tax sense, right?

The second reason it’s wise to consider a marketing investment at the end of the year is that inbound marketing and brand development campaigns take time to see the ROI. Even if the leadership team at a company is interested in investing in a modern, mobile responsive website, it will likely take 60+ days for it to go live. Or, if the company already has a fantastic website and web presence, investing in an off-page SEO or content marketing campaign can offer an incredible return on investment — but guess what? It will take at least 3-4 months to begin getting traction and bringing in new clients. Every business owner wants to start out the new year with a bang, right? The point is, why wouldn’t you pay for the investment at the end of the year, take the write-off and be ready to rock and roll by the first of the year?

Write-Off Ideas

To help wrap your brain around some of ways you could invest, here are a few ideas:

• A brand update that includes an updated logo, business cards, and sales collateral to help recharge your brand and offer an exceptional experience the moment someone first interacts with it.
• A new website, and instead of paying in two or three payments, pay in full to maximize full write-off benefits. What many may not understand is that a new, well optimized website can literally double conversions on your site (i.e. double your leads).
• To improve your position in search engines and have Google or Bing literally refer you business, invest in 3-, 6-, or 12-month packages of off-page SEO.
• If developing thought leadership and authority in your industry is a goal, investing in 3, 6, or 12 months of a content marketing campaign could help naturally draw prospects in to your business.

While there are many other marketing options and each business marketing strategy may be very different, the point is that investing now means you can reap the rewards from both tax savings this year and lead generation the next year.

I encourage each business owner or CMO interested in saving some tax dollars to talk to an experienced digital marketing firm about inbound marketing. You don’t want to make a considerable investment at the end of the year without choosing a digital marketing team with multiple employees who have differentiated areas of expertise. Choose correctly and not only will the write-off help you pay less in taxes, it will also help you build a bigger business — generating new sales and developing a more authoritative brand the next year and beyond.

Rusty Brett is the owner and Chief Executive Officer at Lift Division as well as an investor in a handful of other startups. With several years of entrepreneurship, business ownership and marketing experience, Rusty has a passion for not only launching businesses but also helping other businesses grow their sales and client base.