How to Create a Gift Budget for Your Business

How to Create a Gift Budget for Your Business

Sending holiday gifts to your clients, employees, partners, and service providers can help you show your appreciation for their hard work and support throughout the year. However, gift giving can also get expensive. That’s why you need to set a business gift budget before going on a shopping spree.

Are there a lot of people on your gift giving list this year? That can add up quickly. Here are some tips on coming up with a gift budget for your business.

Creating a Business Gift Budget

Determine the Total Amount You Can Spend

Different businesses have different financial requirements. If you’re just getting started and are trying to stay very lean, you probably cannot afford to purchase as many expensive gifts as a more established business can. To come up with this number, go over your books for the end of the year and see what you’d be able to spend without cutting into the budgets for any of your essential operations.

Create Your Gift List

You also need to know how many people you have to buy gifts for. If you have a large team, then your budget won’t go as far per person as it would if you have just a couple of employees and clients. However, most people appreciate the gesture of a business gift regardless of the value. So it’s better to buy something small for everyone than to leave anyone out. When crafting your list, include all of your clients, employees, partners, freelancers, colleagues, and service providers who support your business throughout the year.

Break It Down

Some simple math can help you determine how much to spend on each person on your list. You should spend roughly the same for the people in each category. But you don’t necessarily need to keep it consistent throughout different types of recipients.

For example, you should spend about the same on every employee. But you will probably spend a bit less on the gift for your letter carrier. You might also spend a bit more on clients with big accounts or people in your upper management team. Just make sure not to show overt favoritism with your gift budget.

There isn’t a specific rule about what to spend one clients or employees. If you have a huge team or extensive list of clients, you might get small gifts that are worth around $10. But if you have a small, close-knit team then you should spend a bit more if you’re able to. With service providers, the amount can also vary depending on their relationship with your business. But gifts of around $20 in value are usually pretty safe for people like postal workers.

Remember Business Gift Deductions

Even though business gifts do represent an expense, they may help you when tax time rolls around. There is a business gift deduction for those who spend $25 or less on each gift and meet other qualifications. This may be able to help some people justify the cost or recoup some of the investment once the new year rolls around.

Consider Alternative Gifts

If you’re struggling to make room in your gift budget for each person, you might consider giving some alternatives that cost little or nothing but still represent a nice gesture. For example, you could send them a handwritten card, offer a special discount off one of your products or services, or give a homemade food item.

You might even host a special holiday party or event in your office with drinks and refreshments. Of course, many of these also come with some expense. But it may help you save a bit while still recognizing people’s contributions.

Spread Out the Expense

If you want to buy gifts for everyone but can’t afford to do so all at once, don’t feel pressured to buy holiday gifts for everyone on your list. You might simply offer small tokens for service providers and then save your client gifts for the new year and recognize your employees on their birthdays. Just make sure that you actually recognize people throughout the year instead of putting off gifts indefinitely. But if you know the plan in advance then you can plan for the expense and keep it manageable throughout the year.


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Annie Pilon Annie Pilon is a Senior Staff Writer for Small Business Trends, covering entrepreneur profiles, interviews, feature stories, community news and in-depth, expert-based guides. When she’s not writing she can be found exploring all that her home state of Michigan has to offer.

2 Reactions
  1. You need to know what you should give away and to how many. This will help you keep track of how much you are spending on gifts.

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