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Gifts help connect people and break barriers, which is why they play such a significant part in the social systems of many societies. In today’s world, it’s more common than ever to see corporations getting in on gift-giving as well. A corporate gift might go to the corporation’s employees to thank them for their hard work, or to clients to celebrate and deepen relationships. It could be promotional items that your business hands out at a convention or free gifts that the company sends to customers who spend a certain amount. Ready to dive into the world of corporate gifting? Our guide will get you up to speed on what you need to know, and we’ll discuss how your business can choose the perfect gifts to communicate its values.
Why (And When) Businesses Give Gifts
Corporations give gifts for a variety of reasons, but all of them ultimately come back to building relationships. When your business gives a gift, you’re communicating that you value your business relationship with them. Some of the occasions when a business might give a gift include:
- New client acquisitions
- Business, professional or personal milestones
- Retirement and going away parties
- Conventions, seminars, and other events
Every business needs a coherent gift policy that defines which gifts are appropriate for which purposes, as well as which gifts employees may accept from each other and from people in other organizations. Let’s look at some of the categories of gifting that businesses can use to further develop their policies.
Types Of Corporate Gifting
Most corporate gifting falls into one of several broad categories:
- Employee Gifts: Employers present these gifts either to groups of employees or individual employees to thank them for a job well done or to welcome them aboard.
- Client/Customer Gifts: Businesses send these gifts to their current clients and customers to celebrate their business or deepen their existing relationships.
- Prospective Client Gifts: Businesses send these gifts to prospective clients in their sales pipeline to help grow a relationship.
- Promotional/Marketing Gifts: Businesses give away these gifts at events to develop public awareness of their brand, stay top of mind with potential customers, and build buzz about their products and services.
It’s important to be aware of which category your gift falls into so you can determine what’s appropriate.
Corporate Gifting And Taxes
A business can take a tax deduction for the value of certain corporate gifts that it gives. The IRS allows a business to deduct the cost of up to $25 in gifts per year, per person or entity, with certain exceptions. Make sure you’re accurately tracking these expenses if you plan on deducting them from your business taxes. What about taxation on the employee’s end? Most small gifts like company swag and holiday gifts are considered “de minimis” or fringe benefits by the IRS. That means employees generally don’t have to count or report them as taxable income. Gift cards are the major exception to this rule; the government does count them as taxable income for the employee and expects taxes to be paid on their value.
Laws And Ethics Rules About Corporate Gifting
Employees of government offices, or people who otherwise hold significant legal or financial power, are often prohibited from accepting gifts. The U.S. federal government, in particular, has strict rules about what gifts its employees may accept. Check the organizational rules first to avoid the potential awkwardness of a rejected gift.
In general, your business should carefully craft its gifting policy, and specifically, the size and nature of gifts, to avoid the appearance of a conflict of interest. While your intentions might be totally above board, it’s important to consider whether gift recipients might feel an undue obligation from accepting a large gift. In such cases, the $25-each IRS rule can serve as a good rule of thumb for avoiding excessive gifting.
5 Popular Choices For Corporate Gifting
Businesses have lots of options when it comes to finding the perfect gift for the occasion. These are some of the most popular corporate gifts today:
1. Snack Boxes
A delightful box of snacks is a sure-fire pleaser. Some companies like to let employees choose between multiple snack box options, while others go with one box that has a little something for everyone. Either way, make sure that you don’t leave out people with dietary restrictions.
2. Digital Gifts
Many of the best gifts today don’t require a box, paper, or anything else except an internet-connected device. These digital gifts can be anything from an ecard to a thank-you video to a subscription to a digital service. Get creative!
3. Gift Cards
Gift cards make a wonderfully versatile gift that can be tailored to anyone’s specific tastes. Although they’re taxable, the taxes will only take a small percentage of the card’s value, meaning the recipient will still get to enjoy it.
4. Event Tickets
Tickets to concerts, sporting events, or other fun experiences are another popular form of gifting. They’re another option that’s easy to tailor to the recipient’s tastes, so consider tickets when you want a gift that will really make someone feel special.
5. Branded Swag
Tons of types of branded items are available, from coffee mugs to golf gear to pens and notebooks. Even branded hand sanitizer in bulk is now a popular gift in the pandemic era! Branded swag makes an excellent marketing gift, but it’s also a great way to thank all employees for their hard work.
Corporate gifting can be a great way to inject a little joy into the workplace, as well as a valuable tool for building relationships. However, well-defined and transparent gifting practices are the key to making sure that gifting works for everyone, so make sure policies are in place before the decision-making process begins.