Is a Summer Barbecue Deductible?

Let's say you are planning a barbecue party later this summer. You want to invite the parents of the children in your care as well as your neighbors. Can you deduct any of the costs of the barbecue as a business expense?

The general rule is that child care providers can deduct expenses that are "ordinary" and "necessary" for their business. A party just for clients would be considered a business expense because it serves a legitimate business purpose - keeping clients happy so they will continue to use your services. Some child care providers throw such parties to reward parents for their loyalty. In this case, deduct these expenses (food, paper plates and cups, beer, etc.) as "advertising" on IRS Form Schedule C.

Note: If you invited business clients to a restaurant, you would deduct the food expense as "meals and entertainment" on Schedule C, where you could only deduct 50% of the cost as a business expense.

If both business clients and neighbors are invited to the party, it is less clear this is a business expense. In fact, the only way I would recommend trying to claim expenses for this party would be if the primary purpose of the party was business-related. That is, you were inviting neighbors primarily to promote your program and discuss business. In most cases I would think that this is not what child care providers have in mind when they throw a party. Therefore, as a rule, don't try to deduct expenses in these situations.

Tom Copeland - www.tomcopelandblog.com

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