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Prepaying Your Marketing Expenses Just Might Reduce Your Next Tax Bill

Updated: Feb 4

Every December, we like to remind our clients and readers of a simple way to save taxes in the current tax year, while investing in their business’s growth for the subsequent year. If your business pays taxes on a cash basis, it is likely you could reduce your tax bill(s) by prepaying marketing (and other) expenses. (Please see a CPA or attorney for specific tax advice.)

Take a look at your marketing plan for specific items you could prepay to reduce your next tax bill. Some marketing investments (expenses) might include:

  • Marketing planning/consulting fees

  • Website development

  • Creative fees

  • Television commercial production

  • Search Engine Optimization (SEO)

  • Printing

  • Event costs

  • Staff training

  • Digital advertising

  • Traditional advertising

  • Marketing seminars

Since media rates often rise over time, it is often especially beneficial to negotiate and pay for media well in advance. Remember, this tax-saving idea only works if you file your taxes on a cash basis. If you file under the accrual method, it will not work for you. Also, make sure you are only prepaying expenses on items you need. It makes zero sense to spend $1,000 meaninglessly to save $300 in taxes.

Remember, there are exceptions to every rule. We are not offering tax or legal advice here. So please consult with your tax attorney or CPA. As a famous person once observed, “I am proud to be paying taxes in the United States. The only thing is I could be just as proud for half of the money.” Let’s legally pay less in current-year taxes when we can.

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