Is Business Coaching Tax Deductible?

Dec 5, 2022 | Deductions

Business coaching, a service in which an experienced professional helps another business owner improve their company, has taken off in recent years.

Many small business owners view business coaching as one of the best investments they can make for success.

After all, what better way to improve than inviting a qualified professional in your industry along so they can point out areas ripe for improvement?

Whether you run a small business or intend to go global, using all available resources to better your business strategy is a strong move.

Since hiring a business coach is considered an investment in your company, you may wonder, “Can I deduct this expense from my taxes?”

Keep reading as we examine the purpose and different types of business coaching and whether or not you can consider this expense as a write-off this tax season.

WHAT IS THE PURPOSE OF A BUSINESS COACH?

Business coaches are typically entrepreneurs or business owners with experience in a specific niche who offer coaching to others in that same niche.

Drawing on their personal knowledge and experience, business coaches can help business owners become better leaders, communicators, and problem solvers.

WHAT’S THE PROCESS OF WORKING WITH A BUSINESS COACH?

When you hire a business coach, the coach’s first step is a complete company analysis. Your coach will want to understand your brand, including your products and services, your target audience, your sales numbers, and your problems.

Next, your coach will review your values and goals as a business owner. Then, she’ll develop a plan of action to help you reach these goals with her help.

While hiring a business coach isn’t required to level your business, having someone in your corner can help expedite the journey toward success.

HOW CAN COACHING HELP MY BUSINESS?

You might be thinking, “My business is doing great! Why would I hire a business coach?” but keep in mind that coaching isn’t just for struggling companies. Even thriving businesses can benefit from professional coaching.

A coach can:

  • Provide unique insight into problems.
  • Encourage and motivate you.
  • Help you learn better workflows, client relationship skills, and problem-solving techniques.
  • Help you gain a deeper understanding of your industry.

POPULAR TYPES OF COACHING

Coaching can look different depending on the type of company, its needs, and the content of the coaching material. Here are a few of the most common coaching categories:

Business Coach: A professional with business experience who assists a company in problem-solving, strategy planning, and goal achievement.

Executive Coach: A professional with business experience who assists the leader of a company in developing professional and personal skills, and overall business knowledge, while also acting as an advisor for problems and ideas.

Life Coach: An individual who advises clients through challenges in different areas of their life. Life coaches may address both personal and professional goals, or they may focus only on personal issues.

It is essential to distinguish the difference because only two of the three here are tax deductible.

IS ALL COACHING TAX DEDUCTIBLE?

YES, business coaching IS tax deductible!

But, as with anything tax related, the IRS has precise requirements that must be met. Not all coaching is tax deductible.

Coaching must be used only for business purposes to qualify for a deduction. Because life coaching focuses on the whole individual, not just business, it would not be eligible.

This is because the IRS allows tax deductions for materials and resources that provide further education and business training to help you and your business grow. But, a coach must only advise on business-related content to qualify for a tax deduction. Any time spent discussing personal goals beyond the business realm does not count.

Interested in discovering more ways to save on your tax bill?

Click here to find out what we can do for you!

You May Also Like

Clean Vehicle Tax Credit

Clean Vehicle Tax Credit

As the public interest in climate-friendly investments grows, we will continue to see developments set by global and local governments to incentivize individuals and businesses towards more climate-friendly choices and operations. One such development can be found as...