5 Top Food Business tax deductions for your small business
For all of you out there who are interested in setting up your own food business, a restaurant or a cafe or any eatery maybe? This article offers information about five tax deductions that you need to be aware of before you set up your business.
The mentioned tax deductions are not in order of importance, let's say most important to least important or anything of the similar sort, They are equally important and have a significant role to pay when it comes to the tax deduction.
- Food Costs: Food costs makes up
around 40 percent of your total annual budget. Food cost is the most
fundamental of any eatery. Even though it is also the biggest expense of
an eatery, you would want to keep track of it. Always make sure to keep
the receipts with yourself whenever you purchase food items from any
vendor, retailer, supply company or even wholesale company. It is very
basic information but an essential one for those of you who are new to
this business or are planning to get into this business. Whatever you buy that
will be used in the final food dish as an ‘ingredient’, you will be
accounted for it. Hence, it is very important to keep all your invoices or
receipts safe with you.
- Cost of Labor: If you are
running an eatery, then you probably will be having some professional help
in the form of employees. So, if you have employees that means you are
paying them something. Wages or benefits. The cost of employees is fully
deductible because that is an expense to operate your business. This will
also include the cost of food for the employees. In addition to these, you
will be accounted for any other expenses when it comes to employees.
- Small Ware: Apparatuses or
utensils which are used for smaller quantities of food items such as sugar
or powdered sugar, are called small ware. The money which goes into buying
these apparatuses is also one of the expenses that you must keep track of.
Small ware also includes any appliances which are meant to deal with
smaller quantities. All the items which cost around $500 or less are
accounted for as small ware. Anything above $500 will not be covered under
small ware and will have a different accounting method.
- The cost of all the linen that
you use in your restaurant will be counted. The napkins, aprons,
tablecloths or any other linen will also be included. The cost of getting
all the linens cleaned, if you are not using paper napkins, will be
counted as an expense.
- Insurance will be the last
expense. When you are running a business, you need to have insurance to
keep your business protected. There are different types of insurances to
keep you covered under different circumstances. Let's say if anyone gets
hurt within the restaurant premises, or maybe you had a fall or maybe
someone else slipped and fell. You need to be prepared for all such
incidents. Apart from these, there is property insurance which is
absolutely necessary to protect your property against any damages.