Are Business Cards Advertising or Office Expense?

For many small business owners, a common point of confusion is how to categorize business cards. Deciding whether to classify this expense as advertising or as a general office supply has direct implications for maintaining accurate financial records, but the distinction is straightforward.

Business Cards as an Advertising Expense

The most widely accepted classification for business cards is as an advertising expense. According to the Internal Revenue Service (IRS), advertising expenses are costs paid to promote a business to generate new customers or retain existing ones. This category includes promotional activities such as running online ad campaigns or printing materials intended to attract business.

Business cards fit this definition because their primary function is to market the business. They carry the company’s name, logo, and contact information, serving as a miniature billboard. When a business card is handed to a potential client or a networking contact, it acts as a direct promotional tool, intended to create brand awareness. This purpose aligns with the guidance found in IRS Publication 535.

The Office Expense Argument

Some business owners might view business cards as an office expense. Office expenses are the costs of supplies used for the day-to-day administration of a business. This category includes items like printer paper, pens, and other stationery necessary for internal operations.

Since business cards are paper products often ordered from the same suppliers as other office stationery, it’s easy to see how they could be grouped together. The confusion arises from the physical nature of the item rather than its purpose. A business card’s function is almost entirely external, and its value is realized only when it leaves the office.

Tax Deduction and Reporting Implications

From a tax perspective, the classification does not change your bottom line. Both advertising and office expenses are 100% deductible from your business income as ordinary and necessary costs. When filing taxes using Schedule C (Form 1040), these categories have distinct lines: Line 8 for advertising and Line 18 for office expenses. The total amount of your deductible expenses will be the same regardless of which you select.

The most important factor is consistency. If you choose to categorize business cards as an advertising expense one year, you should continue to do so in subsequent years. This practice helps maintain clear financial records for internal analysis and in the event of an IRS inquiry.