Meal expenses are an inevitability when running a business, but knowing what meals qualify as a deductible expense for your business and communicating that to your bookkeeper or accountant is key. It's important to keep good records of expenses, such as meals, that could be flagged by the IRS as excessive or extravagant. Because the IRS does not have specific parameters for what it considers to be "reasonable," it's best to keep the guidelines it does provide in mind and record expenses accordingly. Below are some examples of what does and does not qualify as deductible meal expenses for businesses. If you want a more detailed overview of the regulations, read chapter two of Pub. 463.

IRS Rules for Deducting Meals and Entertainment

100% Deductible

• Year-end party for employees and spouses

• Outing for employees and spouses*

• Team-building recreational event for all employees

50% Deductible

• Restaurant meals with partners, clients, and prospects

• Employee meals for the convenience of the employer, served by an in-house cafeteria

• Employee meals for a required business meeting, purchased from a restaurant

• Meal served at a business meeting held in a hotel meeting room

• Meal consumed in a fancy restaurant while in overnight business travel status

• Meals cooked by you in your hotel room kitchen while traveling away from home overnight

• Meals made on premises for the general public at a marketing presentation

• Meal with a prospective customer at the country club following your non-deductible round of golf

NOT Deductible

• Entertainment such as baseball and football games with clients and prospects

• Golf, theater, or football game with your best customer

• Year-end party for customers classified as entertainment

*One time a year only