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:
- Review Your Financials: Determine how much you can afford without compromising essential operations.
- List Recipients: Include everyone you’re considering giving a gift to, such as clients, employees, partners, etc.
- Allocate Budgets: Assign a rough budget for each category of recipients.
- Tax Deductions: Remember that gifts costing $25 or less might qualify for business gift deductions.
- Consider Alternatives: Think about non-material gifts or gestures to recognize contributions.
- Spread the Expense: Consider giving throughout the year rather than all at once.
Creating a Business Gift Budget
Determine the Total Amount You Can Spend
Every business, be it a startup or an industry giant, operates with diverse financial frameworks. Young businesses, particularly, are focused on frugality and cost-saving measures.
Such businesses might find it tough to allocate significant amounts for holiday gifting compared to their established counterparts.
Therefore, as an essential first step in budgeting for gifts, comb through your annual financial statements. Identify what remains after covering crucial operational costs.
Small Business Deals
This gives you a clear picture of the disposable amount for gifts without hampering crucial business activities.
Create Your Gift List
Before diving into the gifting process, it’s essential to quantify the recipients. A business that boasts a vast network comprising numerous employees, collaborators, and clients will naturally have to be more frugal with each gift.
On the other hand, if you’re steering a smaller ship with a tight-knit crew, the leeway for individual gifts could be broader.
Regardless of the financial value, the symbolic value of appreciation remains priceless.
While penning down names, remember to account for everyone—employees, clients, freelance partners, colleagues, and even behind-the-scenes helpers like service providers. Every entity that’s touched your business journey deserves acknowledgment.
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
While the act of gifting is rooted in gratitude, it doesn’t hurt to be aware of its financial implications. Business gifts, while an added expense, can swing in your favor during tax season.
If your gifts hover around or below the $25 mark and you meet specific IRS criteria, you stand to gain from business gift deductions.
It’s a silver lining that can offset a portion of the gifting expenditure, providing a financial cushion. Check the details on the IRS website to ensure you leverage this provision to the fullest.
Consider Alternative Gifts
Monetary constraints shouldn’t dampen the spirit of gratitude. If the budget tightens, it’s time to think out of the box. After all, it’s the thought that counts, and sometimes, more heartfelt gifts come without hefty price tags.
Personalized letters, offering exclusive service/product discounts, or sharing a batch of homemade treats are all gestures that scream appreciation.
Another avenue to explore is hosting an office or business festive gathering. It might come with its price tag, but the shared moments and camaraderie can more than compensate.
Spread Out the Expense
Strategic financial planning is key to sustainable gifting. If the holiday season feels financially overwhelming, it might be wise to stagger your gifting throughout the year. This not only ensures your bank doesn’t break but also offers regular touchpoints of appreciation.
Maybe, service providers get a token of appreciation during the festive season, while top-tier clients get a new year gift. Employees might be celebrated on personal milestones like birthdays.
The crux is to remain consistent in your appreciation, ensuring that delaying gifts doesn’t translate to forgetting them.
By forward-planning, the financial burden gets diffused, making the process more manageable.
As you work to determine your gift budget, utilizing a structured breakdown can simplify the process. The table below provides a framework for you to fill in, allowing you to tailor your budget allocations to different recipient categories within your business community:
|Recipient Type||Approximate Budget||Notes|
|Employees||_______||Consider spending roughly the same for each employee.|
|Clients (big accounts)||_______||Adjust based on client's importance or account size.|
|Service Providers||_______||Think about individuals like postal workers, cleaners, etc.|
|Upper Management||_______||You might opt to allocate a bit more for these individuals.|
More in: Holidays