As you build your business, you’ll eventually reach the point where you’ll need to do a little more to impress clients. Whether you’re trying to win a new client or showing your appreciation for an existing client, taking a client to lunch or dinner is a great way to provide the V.I.P. treatment without spending a fortune.
Cost of a Meal
When you choose to pay for a restaurant meal, you’re essentially paying for an hour or so of mostly uninterrupted time with that client. The cost of this meal can be anywhere from $10 to $500, depending on the size of the party, the choice of restaurants, and whether your meal happens at lunch or dinner.
But does that small investment pay off? While professionalism and work quality are essential to a long-lasting partnership with a client, having a personal relationship is crucial. As a general rule, people do business with those they like. Spending one-on-one time discussing business over a great meal can make a difference in a client choosing and remaining with your business, even as other options come along.
Choice of Venue
While you certainly don’t want to take your client to a fast food restaurant, don’t feel pressured to splurge for the most expensive restaurant in town. There are plenty of quaint, elegant restaurants that will impress your clients without breaking your budget.
For best results, choose an independently owned venue known for its great food and service. While franchise restaurants are great for meeting friends or dining with family, a small business is more likely to impress your client. You may also want to check with your client for any personal preferences or allergies before making a final decision. Asking a vegetarian to a steakhouse could spell disaster for your business lunch.
The good news about the business expense is that your business can write it off at the end of the year. You’ll include it under “entertainment” on Schedule C when you file your taxes. Under IRS laws, you’ll only be able to deduct half of the meal expense, but the total includes any drinks or tips. Another reason to avoid taking your client to the most expensive venue in town, however, is that the IRS may deem it inappropriate. If an expense is too lavish, the IRS may take issue with it.
To improve your odds of success in an audit, make sure you document each business meal, including what was discussed, and the outcome of the encounter. This will not only help with the IRS, it may provide valuable insight into whether business meals are a worthwhile expense in your particular industry.
Building a relationship with a client is a process that begins with the first meeting, and continues throughout your working time together. By at least occasionally treating clients to a meal, you’ll be able to strengthen your bond, ensuring that client continues to work with you while potentially gaining information that will help move your project along.