Sorry to break it to you but April 15 is right around the corner but tax season doesn’t have to be a headache. If you keep accurate and organized records and work with an accountant you know and trust, then this won’t be a season you dread each year.
To make life easier on you and your accountant, think about your deductions all year long and organize your expenses with those deductions in mind, ready to pass along when your accountant asks. Need a quick refresher on eligible deductions? Here you have it!
The big deductions
As one of your biggest expenses, food is probably a pretty obvious deduction. When calculating your food costs, remember to think beyond main ingredients, and include everything you use to make a dish, such as bulk spices, oil, or condiments. Also, don’t forget about food that had to be discarded for spoilage or waste. Get into a system where you account for these expenses as they are incurred, not consumed.
You staff is another of your biggest expenses in your restaurant, but thankfully they have a lot of deductions attached to them. Salaries are all deductible, as well as the cost of the shift meals you may provide to front and back of house staff. If you offer any other benefits to your employees, such as paid time off, retirement savings, or health insurance, those expenses are also deductible.
Do you find yourself driving around a lot in order to run your restaurant? All those miles, parking meters, and car tolls are also deductible. Look into an app that you can use to easily keep track of these types of expenses, such as Expensify or QuickBooks.
Similar to the way in which you deduct charitable donations on your personal taxes, you can deduct donations from your business also. These can be simple cash donations, or a gift certificate you donated to a local nonprofit’s fundraising event, even food. For example, if you catered a lunch for a local nonprofit, the cost of that food is deductible.
Deductions you might miss
Work Opportunity Tax Credit
Many restauranteurs may not even realize they qualify for the Work Opportunity Tax Credit (WOTC). This is a tax credit for employers who hire people from certain groups that have historically faced barriers to employment such as veterans, former felons, residents from Empowerment Zones, and more. This is definitely worth researching, and also something to keep in mind when you’re in the hiring process.
The Section 179 Deduction
Previously a temporary deduction, in December Section 179 it was approved as a permanent tax deduction. This deduction is particularly useful for new businesses just starting out. It allows certain large capital investments, which previously had to be depreciated over a number of years, to be taken as a lump sum deduction the year of the purchase. So, if you’re upgrading appliances, or a buying a new computer in 2017, this will be a must for you.
Whatever system you set up that works best for you, keep yourself organized all year long and taxes will be a breeze come April.
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