Business gift giving has been an aspect of doing business for centuries. Sources show that there has been an increase in business gift giving due to the fact that more business people are appreciative of the tradition’s value than ever before. It is a way to improve relationships, acknowledge excellence, and impart a sense of connection. If it is done properly.

If it is done properly is an important point. This is where gift giving etiquette comes into play.

Common sense rules. First of all, always wrap your gift. One not wrapped can convey a sense of carelessness. Secondly, try to avoid having your company name noticeably displayed on the gift since this is can be viewed as commercialism and is not appreciated during this season. Do be sure, however, to include your name on the gift card. You will be favorably remembered this way.

Also, steer away from overly expensive gifts since they can either make the recipient uncomfortable or be viewed as a form of bribery. However, if your business associate is a multi-million dollar athlete, this writer is not sure what an overly expensive gift would be.

Various points to remember in the gift giving process include the following areas:
• Budget. Determine how much you can spend and divide this by the number of people you are interested in giving to. This will give you an idea of how much to spend per gift.
• Objective. What are you expecting to accomplish or achieve with your gift? Be it practical, emotional, or simply to leave a lasting impression...decide what’s important to you.
• Presentation. Just a little flair will give the sentiment of sincerity.
• Thoughtfulness. A gift that was specially chosen for your associate will be much appreciated. A great way to keep track of this is to maintain a file on all your clients whereby you note their likes and dislikes, hobbies, personal info.
• Personalization. Having their name put on the gift shows them that you view them as being special.
• Scheduling/Timing. It goes without saying to make sure to allow enough time for deliveries, ordering, and the creation of the gifts. Plan in advance since last minute rushes can cause mistakes. A great idea is to have your gift arrive around Thanksgiving. It is sure to stand out from the rest and be remembered for a long time.

After you’ve given thought to the above areas in the gift giving process, you’re going to want to decide what type of gift you want to give. There are the “traditional” gifts, activity gifts, experience gifts, and the consumable gifts.
Traditional gifts are those everyone thinks of when thinking about business gifts. Pen and pencil sets, pen holders, paperweights, etc. Nothing out of the ordinary here.

Activity gifts consist of those gifts where your recipient partakes in, or is a spectator of, some activity such as going to a sporting event.

The experience gift category is where your recipient is given an experience to enrich themselves such as a day at a spa. As you can see, activity and experience gift categories can sometimes cross.

And last, but not least, is the consumable gift category. Of course, this involves gifts that are edible. Depending on the nature of the presentation, this gift category is known to be the least memorable. How many cheese and sausage baskets can one receive?

Presentation is important in this category since it will make the gift memorable. As an example, one holiday season in order to make their cheese and sausage baskets memorable, the Dallas Cowboys had the sausage shaped into a football. It’s not easy to forget a football shaped sausage, wouldn’t you agree? Also, be certain your recipient has no dietary restrictions (such as diabetes) or else instead of receiving an enthusiastic “thank you!” upon giving a basket of Godiva chocolates, you’ll walk away wondering why you received a look similar to that of a deer looking into headlights!
Let’s turn to the classification and taxability of gifts for some more excitement.

The IRS allows $25 per business gift per recipient. And if you and your spouse give gifts, it is considered a joint gift (treated as one taxpayer). It doesn’t matter whether you have separate businesses or independent connections with the recipient. That is a direct quote from Pub. 463, Ch. 3 “Business Gift Expense.”

For corporations giving gifts over $25, the difference would be treated as a reconciling item between your book income and taxable income. It’s considered a reconciling item since it’s reflected totally in your financial statements, but only limited to the $25 on your tax return. For partnerships or sole proprietorships, the difference may be treated as a draw, increasing your profit (not as many expenses taken).

Depending on the type of gift, it could take various classifications on your financial statements. If you are a direct seller, it could be included in cost of goods sold. For others, it could be gifts or entertainment, or advertising. Whatever is most convenient for you.

Onward to some gift giving ideas. For new business owners, a grand opening or congratulations ad in the newspaper would be most appreciated. Professional services firms are known for their love of classics, so a painting with some history would be quite welcome. The entertainment industry, traditionally known for having “every asset,” would enjoy an experience gift — a day on the golf course, for example.

Academia and the real estate fields are known for enjoying more personalized gifts. A gift centered around one’s hobby could be appropriate. Consulting firms have been shown to prefer either traditional or activity gifts. Media base their gifts on the relationship. Loyalty is important in the high technology field, so choose those gifts especially wisely. These are just a sampling to get you thinking.

Finally, the most unusual gift is one involving a sports fan at Tiger Stadium on the closing day of play in that historical venue. Management had “opened up” the stadium to the fans in an appreciative motion. Seats, banners, signs, etc. were all taken. One exuberant person even took a urinal out of the men’s restroom. If that person was a business owner and gave that gift to a business associate who was a huge sports fan...well, that would be one unusual executive gift.

(Editor’s Note: Marie Buckner is a freelance writer who has over 15 years administrative experience in performing research, both online and off-line for business owners. Contact her at (360) 613-1085.).