MAKING CHARITABLE CONTRIBUTIONS THROUGH MY BUSINESS HELPS ME. RIGHT?
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I have heard many times; business owners say that making contributions to charitable organizations gets them a tax deduction. They can save more money in their business by doing this. Well, the true answer is not what they want to hear.
For most of the businesses in the US, the answer is NO. Why not, you say? I gave money for business purposes to a charity. It should count for the same deduction as office supplies or wages. It does not.
There are three main business entities in the US. Sole proprietorships (single owner), partnerships (two or more owners) and corporations (small and large). Of course, you have the LLC (limited liability company) which can be any of those three.
The issue is that under sole proprietorships, partnerships and s-corporations (one of the two types of corporations), charitable contributions are considered pass-through items. Pass through items is not deducted to arrive at the net income or loss of the business. They are passed through or down from the business to its owners. The owners then take the deduction on their personal return just like if they had made the contribution themselves. For a c-corporation (the other type of corporation), the charitable contribution is deductible to a point but that is because a c-corporation is a standalone, tax paying business.
Ok, so I will take the pass-through contribution off my personal taxes then, you say. Well maybe and maybe not. In 2018 we had a major tax change which doubled the standard deduction and eliminated personal deductions. When doing a tax return, you reach a certain point in preparation where you can deduct the HIGHER of your standard deduction or the total itemized deductions you have. Itemized deductions include out of pocket medical expenses above certain amounts, personal taxes paid, mortgage interest and charitable contributions.
The problem is the standard deductions more than doubled in 2018 to almost $25,000 for a family ($12,500 for single) and have been going up each year since. Most people who did have higher itemized deductions under the prior to 2018 rules found out they did not itemize in 2018 and after. With the low interest rates, it is very hard for taxpayers to qualify for itemized deductions.
So those pass through charitable contributions do not effect your return if you do not itemize.
What can you do? First off, pick one or two organizations to support locally. Talk to them about sponsorships of programs, events, etc. and what “advertising” opportunities your business can have. I am not talking about your company name on a giving board in the lobby.
Here is an example from me. I buy a sponsorship package each year for an organization for a large dinner and auction fundraiser. In return I do receive a dinner ticket and merchandise, which I reduce my cost by. What I get is that the organization places my company name in the program brochure, with my logo. They also have a continuous, rolling slide presentation of all sponsors going all night for the businesses who bought sponsorships.
Now do I take 100% of the remaining cost as advertising? No, more like 80% which I classify as Advertising! The remaining 20% goes to charitable contributions. So that 80% of the remaining cost is advertising, which is now deducted as a business expense to determine net income or loss.
So, I went from a nondeductible charity expense to a partially deductible business expense. As always you need to discuss things like this with your tax advisor or preparer. If you do not have one, please call our office for an in-office, ZOOM or phone meeting to discuss your entire tax situation.
Inflation isn’t gone—it’s just quieter. Around 3% feels tame compared to the chaos of the past few years, but that doesn’t mean it’s harmless. For most business owners, small shifts in pricing, payroll, and supply costs have become the new normal—slow, steady pressure that eats into margins one percentage point at a time. But here’s the thing: inflation doesn’t just erode profit. It also creates permission. Permission to reprice. Permission to renegotiate. Permission to rethink how your business makes money. And as we head into year-end—when every business is reviewing budgets, forecasts, and compensation plans—now’s the perfect time to turn inflation from a problem into a strategic opportunity. The Inflation Mindset Shift: From Defense to Offense Most owners treat inflation like a storm to wait out. They hunker down, cut costs, and hope the economy stabilizes. But smart firms? They play offense. Inflation gives you the perfect narrative to reset pricing, refine operations, and re-anchor value with your clients or customers. Think about it: when everything costs more—from raw materials to insurance—people expect prices to adjust. That makes this moment the cleanest window you’ll get to implement changes that were overdue anyway. Step 1: Reprice With Confidence, Not Apology The biggest mistake small businesses make is treating price increases like confessions. “Sorry, but our costs went up.” Instead, reframe it as value alignment: “We’ve upgraded our processes, improved delivery, and invested in technology to serve you better.” Even if your costs are rising, your value probably has too. If your last price review was more than 18 months ago, you’re already behind. Inflation gives you cover to fix that. Step 2: Audit Margins and Cash Flow Before You Budget Before you finalize 2026 budgets, run a true margin audit. Which services or products are still profitable at today’s costs?
Which are borderline or underwater?
Which clients consistently underpay for the value delivered? Then connect that data to your cash flow forecast. A business that plans around real margins—versus assumptions—has control. If you haven’t reviewed vendor contracts lately, this is also your chance to lock in rates before potential tariff shifts or supply cost changes next year. Step 3: Forecast Smarter, Not Just Harder Forecasting isn’t about predicting inflation—it’s about being ready for it. Smart firms use 3-scenario forecasting: Best case: Inflation drops further, demand grows.
Base case: 3% inflation continues, steady but modest growth.
Stretch case: Tariffs increase, costs rise, and cash flow tightens. By modeling each, you build agility—not anxiety—into your business plan. Step 4: Align Compensation and Value Creation Inflation doesn’t just affect costs—it affects expectations. Employees feel it too. As you plan 2026 compensation, think about rewarding value creation instead of just cost-of-living bumps. For example: Introduce profit-sharing to align team success with performance.
Offer flexible benefits like health stipends or hybrid schedules—high perceived value, lower cost.
Communicate transparently about financial goals. Most teams handle reality better than silence. Step 5: Protect Profitability Before It’s a Problem When inflation was at 8%, you could blame it for shrinking profits. At 3%, it’s just math. That means you can’t afford to ignore the incremental hits—subscription creep, silent vendor increases, underpriced legacy clients. The businesses that thrive in 2026 will be the ones that use this “quiet inflation” window to: Trim inefficiencies before they compound.
Rebuild reserves.
Reinvest in tools that save time or improve margins (think automation, AI, or better client systems). The Big Idea: Inflation as a Reset Button You can’t control the economy—but you can control how your business responds to it. Inflation isn’t a crisis anymore. It’s your chance to reset the rules—on pricing, partnerships, and profitability. When you treat inflation as an opportunity, not a threat, you stop playing defense and start leading from strength. Ready to Plan Your 2026 Strategy? Now’s the time to review pricing, forecasting, and compensation plans before the new year begins. If you want to make 2026 your margin expansion year—not another squeeze—contact our firm. We’ll help you analyze your numbers, refine your strategy, and move into the new year with confidence and control.
Growth Feels Great—Until It Doesn’t At first, running your business feels simple: money comes in, bills go out, and if there’s something left over, you’re doing fine. Then growth happens.
More clients. Bigger projects. Higher payroll. Maybe even a second location. Suddenly, cash doesn’t flow the way it used to. You’re booking record sales, but your bank balance looks… thin. You’re working harder than ever, yet the pressure to make next week’s payments feels heavier. Welcome to the paradox of growth: the bigger your business gets, the tighter cash flow can feel. Why Growing Businesses Feel Cash-Poor It’s not bad management—it’s math. As revenue grows, so do: Accounts receivable: Clients take longer to pay larger invoices.
Inventory or project costs: You spend cash weeks (or months) before you earn it back.
Payroll: Growth usually means more people—and payroll hits like clockwork, even when customer payments don’t.
Taxes: Higher profits mean higher estimated payments that pull cash out of your account quarterly.
Growth stretches the timing gap between money going out and money coming in. Without a system to monitor and forecast it, you’re flying blind. The Shift: From Bookkeeping to Cash Flow Strategy Most small businesses start with simple bookkeeping: track what you earned, record what you spent, file the taxes. But once you grow, you need something more— cash flow management that looks ahead, not just backward. That’s where financial professionals make all the difference.
They can help you: Forecast inflows and outflows weeks or months in advance.
Spot cash gaps early—and plan around them.
Build reserves for seasonality or growth spurts.
Model “what-if” scenarios (new hires, equipment purchases, expansions) before you commit. In other words, they help you turn growth from a guessing game into a system. Real-World Example: The Busy-but-Broke Dilemma One of our clients doubled revenue in a year—then almost ran out of cash. Why? Every big new contract required more up-front costs and staff before payments arrived. Once we mapped cash flow month by month, they saw the problem clearly. With a few tweaks—changing invoice terms, adjusting payroll timing, and setting up a short-term credit line—they moved from panic to predictability. The revenue didn’t change. The system did. Bottom Line Growth brings opportunity—but it also brings complexity. What used to fit on a spreadsheet now needs structure, foresight, and strategy. If your business is growing fast but cash feels tight, it’s time to move beyond basic bookkeeping.
Contact our firm today to build a cash flow plan that grows as smart as you do.
Are you ready to make the move? Are you looking for someone to help you grow your business? A CPA firm who cares about not only your business but you as a person? A firm which can bring insight into your business? One that looks out for your best interests while keeping you compliant with all the IRS, state and other financial regulations? If so, we are looking for you! Steven Brewer & Company, CPAs, is brick and mortar office with a strong virtual presence. We are looking for the right clients to join us. Currently we work with over 35 companies in 20 states. We know how to work virtually with our clients. We work to help you understand your business; help you plan for the future and use your business assets in planning for the best results in building your future. If you are looking for all of this, give us call (812-883-6938) or drop us an email (admin@stevenbrewercpa.com) to schedule a meeting to discuss your financial needs. In the meantime, check out our website, stevenbrewercpa.com, to find out more about us.