(FORTUNE Small Business) – Whether you believe that charity covers or creates a multitude of sins depends on your preference for the Bible or for Oscar Wilde. But one thing's for sure: There are a multitude of ways to give money away, as an individual and a business owner. Read our tips and ask your lawyer or accountant.

But don't forget the definition of charity: almsgiving, or the performance of benevolent actions for the needy, with no expectation of material reward. Don't do it just to starve Uncle Sam. Too much tax engineering can be very expensive, and anyway, government does do useful things: Ask your Grandma and Grandpa, who lived through the Depression and won World War II.

HIGHWAY TO HEAVEN: Giving After You've Gone

Here's a classic form of giving that will make your accountant, your executor, and the charity happy. Leave money to a charity named in your will. When you die, the charity gets all of it, the IRS none. Alternatively, as an individual you can create a charitable trust. There are two main kinds; in either case, the best bet is to fund it with appreciated stock or an asset that isn't paying income, such as a vacant building. The trust will sell the asset at market value and invest the proceeds into something that does pay income. A charitable remainder trust will then give you the income and leave the principal to the charity once you die. A charitable lead trust pays the charity the income, then leaves the principal to your heirs. Either way, you get the full value of the asset, more than you'd get without the trust's protection. You'll avoid the capital gains tax--and may get a deduction, to boot.

NO TIME LIKE THE PRESENT: Giving It Away in the Here and Now

The garden-variety form of philanthropy--giving while you're still around to enjoy it--is to donate cash or used goods, such as clothing, appliances, or furniture, and deduct the value from your income taxes. But the amount of your deduction is capped by the IRS. First you must itemize, and then the total deduction for all your donations can't exceed 50% of adjusted gross income. Companies get a far smaller deduction--up to 10% of profits. That applies to cash, goods from inventory, or your old fax machine.

Choose carefully: There are separate caps on deductions, depending on what you're donating--such as cash, goods, or stock. Keep in mind: You may get a nice tax break for your beneficence, but it's a one-time hit and, of course, you won't have that asset or cash anymore.

You get more bang for your buck by donating appreciated assets such as stock. The rules allow you a deduction for the fair market value of the securities, up to 30% of your adjusted gross income. You don't have to pay capital gains tax on the appreciation, and the charity gets that full value.

Example: Suppose you bought 1,000 shares of Acme Funeral Homes at $5. Over the years, Acme becomes an entertainment giant and then an Internet play. Your $5,000 stake in Acme.com is now worth $1 million, and you decide to donate 100 shares. If you sold the shares and donated the cash, you'd first have to pay capital gains tax--$19,900 on a profit of $99,500. Your donation (and tax deduction) would drop to $79,600. If instead you donate the shares, the benefits are several: You owe no capital gains tax, you can deduct the full $100,000 market value (up to 30% of your income), the charity nets $100,000 from the sale, and you're a hero.

Careful, though. You get these benefits only if you hold an asset for longer than a year. Less time, and you deduct only for the price you paid originally. If you're indecisive, or just "need" a charitable deduction right away, look into the no-fuss, no-muss alternatives at a mutual fund. Many now have "donor-directed" charitable vehicles that let you donate now and pick a charity later.

SHARING RISK AND REWARD: Making a Gift of Your Own Company's Stock

Suppose you just started Gimmemoney.com, a Web-based service that delivers cash to customers at any hour. Prior to its initial public offering, you get the shares appraised (by a certified appraiser). At $2 a share, you donate 1,000 shares and take a $2,000 deduction. But if Gimmemoney.com goes public at $10 per share, the charity gets a $10,000 bump. Clearly, this works best if you have nothing else to give and if the charity can wait for an uncertain (though possibly big) payday.

NOT JUST FOR BILLIONAIRES: Choose a Cause and Set Up Your Own Foundation

If philanthropy is a habit, you may want to set up a private family foundation. It gives you more control and makes tax planning easier, since you can make your gifts to the foundation at any time and in any amount. Deductions, however, are limited to 20% of your gross income. It's especially gratifying to establish a particular focus for the foundation, such as literacy or battered spouses (though this won't affect the tax benefits either way). When you go to heaven, the foundation is not considered part of your estate for tax purposes.

Warning: Federal law requires foundations to give away 5% of their assets each year. And there are costs involved: lawyers and accountants to set it up and make filings. And unless you have time to run the foundation yourself, you'll need to staff it or hire a consultant.

SHARE THE WEALTH: Profit on the Paul Newman Model

Companies get to deduct charitable donations, too. But generally only the bigger companies, structured as C corporations, get to use the deductions themselves, and that's capped at 10% of profits. Most smaller companies, structured to pass deductions through to their owners, don't show that kind of profit--or get the tax breaks. Still, company donations have pluses. They're great for community relations, generating publicity as well as goodwill. And the charitable efforts may become advertising or promotional expenses, deductible either way.

TIME IS MONEY: Give Your Talent and Your Savvy

You can always give away your worldly goods. What's harder--but more rewarding--is giving time. Today's nonprofits are hungry for experienced professionals to help them achieve the goals of a for-profit business: leanness, efficiency, and maximum returns.

Sitting on the board of a charity, you can use all the skills you've developed running a business, often delivering a needed reality check. Think of it as putting your mouth where the money is. You can nix lavish fundraisers, help strong-arm a vendor, or design a marketing campaign. And you may build solid business relationships and new networks.

Jeff Levine and David Martin are FSB's Answer Men.

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