This cost may be included in the cost of food, or it may be recorded as a separate expense. The cost of providing meals to employees at a restaurant’s physical location is generally deductible to the restaurant and not taxable to employees. So, it’s wise to make the calculations to determine which option will save you the most on your taxes. Plus, once you choose either of these write-off options, you’re generally stuck with this method for several tax-filing years. If you use your personal vehicle to deliver food or for catering groups at events, don’t forget that you can deduct either the miles you drive for your business or the actual expenses you incur for driving in your restaurant business-not both. See Also: How to Start a Successful Restaurant Consider your mileage deduction options However, by staying in line with reasonable compensation, you should be just fine when writing it off. If the IRS reviews your tax and payroll data and believes that you are overcompensating employees based on other compensation amounts reported on returns within the restaurant industry, these payments you offer may not be fully deductible. If you have employees who receive compensation and benefits, there are some rules on deducting this pay and these perks that you provide them.Īny form of compensation you dole out must be provided for work that your employees perform. More expensive equipment, such as an oven, is often best to depreciate to maximize your tax savings on it. When purchasing equipment for your restaurant, you can either deduct the cost of the equipment in the year in which it was purchased, or you can deduct it in smaller amounts as its value depreciates over the course of several years. Each location in which you maintain a restaurant may require separate sales tax collections and filings, so it’s critical to keep track of this important financial information so you can properly report and submit all sales taxes to all respective agencies. Remember that cities, counties, and states often have different sales tax requirements. If you operate multiple locations, this is even more important. Make sure you are fully up-to-date on the sales tax requirements of the city and state in which your restaurant is located. See Also: 39 Things to Ask Yourself Before Starting a Restaurant Understand your sales tax requirements
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