Often when completing small business accounts we find people confused about what they can claim for Entertainment Expenses.
The number 1 Rule is the expense needs to be related to your business i.e. linked to earning your income.
For most small businesses the majority of entertainment expenses are only 50% deductible. Examples of these are:
- Food and drink, including meetings with clients or staff
- Friday night drinks for staff
- Lunchtime food shout to staff
- Christmas party for staff
The exception to this is food and drink while travelling out of town on business, which is 100% deductible.
IRD expects you to keep records of:
- The date the expense was incurred (bill/receipt)
- The names of people entertained and the business they represent
- The reason for the entertainment