An office party is a wonderful way to let your employees know how much they mean to you, and to help build camaraderie. Providing employees the opportunity to interact with one another in a less formal way, and involving their families, helps them work together the rest of the time.
Whether it’s an annual holiday party, summer picnic, or other gathering, employee parties can be a valuable tool. Employee parties can also be expensive, at least if you want to do them right.
Fortunately, there are some ways that you can save money on the cost of your employee party, and make sure that you’re able to deduct the lion’s share of the costs from your taxes. Here are some steps you need to consider:
Consider having the party at the office. Chances are that your business already has some space that’s dedicated for the use of employee meetings. By having the party at the office, you save significantly on the cost of the site to host the event. You’ll probably spend more on decorations, but it should be a net gain.
Invite all of your employees. Events that all of your employees are invited to generally qualifies for a 100% tax deduction, whereas smaller events that only involve some employees or that also involve other business-related people are only deductible at 50%. Talk to your tax expert about this, of course, to make sure that you’re following all of the established rules. This is the one area where you can save significantly.
Alternatively, hold the party in a restaurant. By having your employee party at a restaurant, you trade the catering charge for a per-person charge – which will usually save you around 10% on the cost of the food and venue combined. Many restaurants have private event spaces that are perfect for employee parties.
Look into a daytime party. As a general rule, having a lunchtime meal is almost always less expensive than having a dinnertime meal. The lunch menu is simply cheaper, whether you’re talking about restaurants, caterers, or even hotel banquet services. In addition, a daytime party will increase participation. Be careful here; if you’ve always held parties in the evenings in the past, the noticeable change of time could send an unintended signal to the employees that cost is a problem.
Carefully select your catering choices. You can often make small choices in terms of your catering selections that can provide significant savings. For example, you can go from seven courses down to five. You can go with lamb chops instead of filet mignon. Two dessert choices will be more cost-effective than four. Generally speaking, your caterer will work with you on price, helping you to get the right menu for your budget.
Choose a DJ over a band. A DJ is always less expensive than a band. In fact, even a well-known DJ in your area is still going to be between 25% and 50% of the cost of having a full band. This is a significant savings, and one that generally won’t significantly impact your employees’ enjoyment of the party.
Control costs of decorations. If you’re having your employee party at a hosted venue, you’re going to have to rent linens and provide centerpieces, typically. Still, you can save some costs here. Consider using candy bowls instead of flowers for a centerpiece, and use complimentary linens instead of upgrading. Be careful here, because the wrong linen selection can sometimes be something of an eyesore, and might be viewed very critically.
Require or request a contribution for guests. This one isn’t as touchy a subject as it used to be. Consider asking employees for a contribution for those attending from their families. This is also important for tax purposes, because it will help the accounting department when they put together the amount of the event that’s deductible. The IRS says that only expenses for employees should count, so asking for a guest contribution is one way around that. Realize, as well, that this might ruffle employee feathers, especially if guests have been complimentary in the past.
Just because you want to save some money doesn’t mean you don’t value your employees. An employee party can be a wonderful tax deduction, and it can also help to keep your employees’ spirits up and improve morale. Follow these steps to control costs, and to make sure it pays off at tax time.
Nick Simpson is Social Media Coordinator at SavingStar, a leading provider of grocery store coupons. SavingStar has built cutting edge systems for coupon savings and has a rapidly growing customer base of happy shoppers that save money with their store loyalty programs.