Avoiding Legal Liability from Holiday Gifts and Parties

As the holiday season approaches, business owners often think about gifts, business parties, and other sorts of benefits for a year of hard work and relationships — and expect for extra earnings and referrals in the year to come. But it’s important for business owners to understand that even if they have the best intentions, tax and legal liability may spring from their efforts.

Holiday parties are just one kind of holiday traditions for small to large businesses. Small businesses may invite vendors, clients, and other individuals to the party to liven it up. Moderate to large companies may encourage their top vendors and clients, along with all their employees, should they feel it’s appropriate. But even hosting a party produces legal risks, typically in the kind of incidents involving alcohol and sexual harassment.

Alcohol-related Liability

To decrease the liability of mishaps — both in the party and then it ends — with no alcohol is best. If you have to have alcohol in your party, use the following best practices to limit the chance or accidents, DUIs, and other events caused by intoxication.

  • Ensure minimum age of 21. Limit alcohol to employees and guests 21 and older. It’s wise to not have anybody under drinking age in the party in any respect. But if you do, have a very clear policy that any workers that help people under 21 drink, or any personnel which are under 21 that beverage, will be terminated immediately with trigger.
  • Restrict alcohol servers to professional bartenders. Bartenders are generally trained not to over serve their clients. You can apply this by (a) asking bartenders not to serve anyone who appears even slightly drunk, (b) handing tickets out to restrict the amount of drinks each individual has, and (c) ensuring that there are loads of non-alcoholic drinks for the bartender to indicate in lieu of alcohol.
  • Provide coupons for alternative transport. Whether you hand transport coupons out to everybody or to individuals who might have drank too much, have transportation solutions available.
  • Provide disincentives to drink. Have your party early in the day or limit the time that the bar is open. By making sure guests have disincentives to drink — many individuals don’t wish to be tipsy at noon — or restricting the time they can drink by with an open bar only from 5 p.m. to 6 p.m., before dinner, you can help guests from drinking too much.
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Sexual Harassment Liability

In reference to sexual harassment claims, it’s necessary to remind all employees of the provider’s sexual harassment policy prior to any holiday celebrations, especially the ones that will involve alcohol. Additionally it is important to make sure that if there will be an”after-party” involving workers, all business codes of conduct are followed there, also.

If your organization has a dress code, it could be sensible to inform employees the very same criteria will be utilized for the celebration. Making the holiday celebration available to spouses and significant others may also curb sexual harassment since most people won’t make sexually suggestive remarks to other folks facing their spouses.

Gifts to Employees, Vendors, Clients

You could be thinking about giving gifts to employees, vendors, and customers. Each of these might be treated differently for tax and legal purposes. Knowing the rules beforehand helps.

For workers, if you give cash or gift certificates, the money value is typically treated as wages and income tax must be withheld. Holiday gifts to employees are just untaxable if they are”de minimis fringe benefits” — i.e., have very little value. Examples of this include purchasing for workers vacation hams or turkeys, flowers, and other low-value gifts. If you worry if a gift is taxable or not, ask your C.P.A. or lawyer before the purchase.

For vendors and customers, the I.R.S. rule typically says that you can gift up to $25 per person each year. If a gift is to an individual, this rule will apply. However, in most cases, it is possible to give a gift to a company — like a fruit basket for each the workers to share — and there’s not a limitation on the quantity of the gift. Additionally, there are special rules if you choose gifts that fall under what the I.R.S. believes amusement. Be certain that you consult a C.P.A. or attorney if or not a gift could be counted as a cost before making a costly purchase.

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