mileage deduction

Common Expenses for Restaurants

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Properly recording and categorizing expenses is an important part of bookkeeping. It gives the business owner insight into how their money is being spent and helps them maintain a healthy cashflow. And when tax time comes, they can maximize their deductions because the necessary records have been kept throughout the year.  

Every industry operates in its own unique way so expenses vary across different types of businesses. In this blog post, we’ll explore the expenses restaurant businesses commonly incur.

Employee benefits

Paid sick leave, vacation pay, and health insurance benefits provided to employees are tax deductible for the restaurant business.

Vehicle mileage

If you or your restaurant’s employees drive to make deliveries, provide catering, or pick up supplies, these costs can be deducted from your taxes. The key is to accurately track the miles driven for business purposes. You can learn more about the mileage deduction in this blog post.

Accelerated depreciation expenses

In the past, certain capital investments could only be depreciated over a number of years. With Section 179, some equipment can be depreciated as a lump sum in the year of the purchase. The break is meant to make it more affordable for small businesses to buy up to $500,000 worth of qualifying equipment — including computers, vehicles, furniture, and kitchen appliances.

Employee meals

Many restaurants allow their employees to order a free meal during their shift or provide a “family meal” for everyone to share together. These meals are deductible at cost for the restaurant and not taxable to the employee.

Donated food  

Many restaurants are unaware there is tax benefit for donating unused food. You can claim an enhanced deduction if the food is donated to an organization that qualifies under section 501 and you meet other requirements set by the IRS.

Holiday parties

It’s common for restaurants to throw a party for their staff during the summer or holiday season. The cost of a holiday party is fully deductible for the restaurant, as long as it’s hosted primarily for the employees. That means you shouldn’t invite your friends or favorite customers. However, your employees are allowed to bring their spouses or significant others.

You should also make sure your party isn’t too lavish. An excessive holiday party deduction can cause the IRS to take a closer look at your company’s entire tax return.

Employee gifts

In addition to hosting a party, many restaurants give their employees gifts during the holidays. Gifts are deductible for the business, provided they don’t exceed $25 per employee per year.

In most cases, a gift is not taxable income for an employee. They’re considered a de minimis fringe benefit, which is Latin for “of minimal value.” The IRS notes on their website that gifts are de minimis as long as they cost less than $100 for each employee. So adhering to the $25 limit will keep both you and your employees in good shape from a tax perspective.

However, one exception is gift cards. Because they have a cash value, gift cards are taxable income for employees, regardless of the amount.

The Work Opportunity Tax Credit

The Work Opportunity Tax Credit (WOTC) encourages businesses to employ people who traditionally face challenges finding work. You can receive a tax credit for hiring veterans, people with a criminal record, food stamp recipients, residents of Empowerment Zones, and people referred by vocational rehabilitation services.   

Bookkeeping Express (BKE) specializes in accounting and bookkeeping for quick service restaurants, full service restaurants, coffee shops, and specialty food providers. Visit our restaurants page to learn how BKE can assist your business.

7 Tips for the On-the-Go Business Owner

Not long ago, most business owners needed a dedicated space to work from. But these days, it’s easier than ever to get things done over the internet. While traditional offices are still common, many business owners are choosing to work while on the go instead. Equipped with a laptop, mobile phone, and a tablet, you can setup at a coffee shop or library and take care of most your business responsibilities.

Working remotely takes some getting used to. With that in mind, we’ve compiled seven tips for the fledgling on-the-go business owner.

1. Pack everything you need for the day

When you work in an office or at home, you’re used to having pretty much everything you need within the building. But when you work remotely, you’ll have to carry all your daily necessities with you.

Be sure you don’t leave the house without packing everything you need to get your work done, as well as everything you need to stay comfortable throughout the day. It’s a good idea to make a list and double-check it before you head out for the day.

2. Use mobile apps

When you work on the go, the majority of your business is going to run through your mobile phone and tablet. You’ll use it to stay in touch with customers and colleagues and to manage your business responsibilities.

The “there’s an app for that” iPhone slogan is even more true now than it was when Apple first started using it in 2009. Apps like email, calendar, maps, and mobile banking are staples on most people’s phones but there are probably other ones that can help you run your specific business. If you have any responsibilities that you struggle to accomplish efficiently, try searching for an app that can make it easier.

3. Your finances on the go

There are numerous financial apps that can help you manage your cashflow while out and about. Using accounting, bill payment, expense management and invoicing apps, you can make sure you never lose touch with your business’s financial situation. And instead of setting aside office time to review your outstanding invoices and pay your bills, you can do it from your phone when you have a free moment.

4. Stay charged

Your laptop, phone, or tablet do you no good when the battery is out of juice. Be sure you charge all your devices before you leave home and to carry all the power cords with you. Full batteries across all your devices should hopefully get you through a complete workday but you can always plug-in at a coffee shop or library, if you have to.

5. Stay secure

It’s crucial that you protect your business and personal information when working on a public network. One of the first things you so do is turn off your laptop’s sharing setting. It’s great to be able to connect to wireless printers and hard drives when you’re on a private network but unfortunately this feature has far more risk than benefit on public wifi. From there, you can build additional security layers using a Virtual Private Network (VPN) or Firewall.

6. Track your mileage

If your business requires you to drive between offices, meetings, or job sites, there’s a good chance you can claim a mileage deduction on your business taxes. You can learn more about the mileage deduction and how to qualify in this blog post.

7. Nothing replaces the in-person meeting

For as great as technology is, there will still be times you need to meet with a colleague, customer, or partner and have a face-to-face conversation. When the needs for these meetings comes up, it’s a good idea to have a preferred location in mind. It might be a cafe, restaurant, or even your home.

Working on the go can be a welcomed change from the confines of an office. Just be sure you’re completely prepared to get your job done while you’re on the move.  

BookKeeping Express (BKE) provides accounting and bookkeeping services for businesses. We can help manage your finances and recommend software and mobile applications that can help you run your business with ease. Contact us today to learn more.

The Mileage Deduction: What to Know About Using Your Car For Business

Do you drive in the course of running your business? If so, there’s a tax benefit you might be able to take advantage of. The miles you put on your odometer or the cost of using your car for the following types of drives can be deducted from your business taxes:

  • Drives between offices – If your business has more than one office, you can deduct the cost of driving between the different places you work.

  • Drives between job sites – Some businesses, like home service contractors, often have multiple jobs taking place at different locations. Like offices, the cost of driving between job sites is deductible.

  • Drives to and from client meetings – You can deduct the cost of driving to meet your clients, whether it be at their home, place of business or another location, like a restaurant or coffeeshop.

  • Drives to and from the airport (or other places you travel from) – The cost of any drives you make to take more extensive travel for business, like to an airport or train station, can be deducted.

  • Drives to run business errands – Any driving you do to pick up supplies or take care of other tasks for your business is tax deductible.

By and large, any costs you incur when driving in the course of running your business can be deducted from your taxes. However, one of the biggest mistakes business owners make is also including the cost of driving between their home and where they work. The IRS clearly states that commuting to and from your home is not business travel and cannot be claimed as an operating expense. That being said, there are two exceptions to this rule.

You have a home office

If you run your business from home, commuting to and from your residence is the same as driving between offices. However, the area of your house you work from must meet the IRS requirements for a home office. You can learn what qualifies as a home office for tax purposes in this blog post.

You’re commuting between your home and a temporary office

This IRS allows you to deduct the cost of driving between your home and a temporary work location that is not your primary place of business. You must work from the location for less than a year for it to be considered temporary.

Calculating your vehicle deduction

You can determine your vehicle deduction using the standard mileage rate or by calculating the actual expenses associated with using your car for business purposes. There are some restrictions to which method can be used by certain businesses that are outlined on the IRS website.

Standard Mileage Rate

The standard mileage rate is easier to calculate and often comes out to a bigger deduction. Using this method, you can deduct 54 cents for each mile you drive for business purposes this year (note that 54 cents per mile is the 2016 rate).

Actual Expenses

Your other option is to calculate the actual expense of using your vehicle for business purposes. Using this method, you add up the annual costs of gas, maintenance/repairs, insurance, registration fees, and depreciation in order to determine your total vehicle costs for the given year. You then figure out what portion of your total mileage is attributable to business travel and take that percentage from the total annual vehicle cost to determine your deduction.

If you have a dedicated vehicle that is used solely for your business, figuring out your annual business mileage is simple. All you need to do is subtract the mileage on the odometer at the start of the year from the odometer reading at the end of the year. The difference is your annual mileage.

If you have a vehicle that you use for both business and personal means, tracking your annual business mileage is more complicated. You’ll need to keep the miles you drive exclusively for work separate from the miles you drive for personal reasons in order to have an accurate vehicle deduction. The good news is there are a few good mobile applications that use GPS to track and log miles driven for business purposes.

BookKeeping Express (BKE) can help you track your expenses and prepare for your tax filing. Visit our features page to learn more.