Splitting Advertising Costs Between Your Companies

Allocate the cost from the actual campaign and business benefit. Shared ownership does not make an arbitrary percentage reasonable, and an allocation should not be reverse-engineered to move taxable income to the preferred entity.

A business-owner scenario

An owner operates an online store and a consulting company under related brands. The store pays the marketing agency, but some campaigns promote consulting. Start with campaign reports, landing pages and the agency's scope rather than dividing every invoice equally.

Illustrative scenario, not a client result.

Work through the transaction

Identify the customer and offer promoted by each campaign.
Separate directly traceable costs from genuinely shared work.
Document a consistent allocation and any intercompany settlement.

The mistake that changes the result

A revenue-based allocation may be convenient while poorly describing a campaign devoted entirely to one business.

Records that resolve the question

Agency agreement.
Campaign reports.
Invoices by project.
Intercompany billing history.

The decision to document

Ask the bookkeeper and advisor to agree on a method supported by available evidence. Review it when campaign objectives change; the goal is a defensible operating allocation, not a desired tax result.

Which fact changes the answer?

A campaign-specific landing page and invoice can support direct assignment better than an overall revenue ratio. For shared brand work, describe the benefit each business receives and revisit the method when one business stops participating.

Explore multiple-business coordination advisory · Discuss your situation with AE Tax Advisors

Sources and scope

General educational information prepared with AI assistance. No individual professional review is represented. Apply the relevant tax-year rules to the actual records. Editorial policy · AI disclosure.

One of my companies pays all our advertising. How should we split it?