4 Tax Deductions For Restaurant Owners

January 1, 2021

If you opened a restaurant in the past year, it’s important to know what tax deductions apply to you. Restaurant owners can claim numerous write-offs that reduce their income taxes, which is often especially important for new owners who have put a lot of money into their establishments. Review common deductions your Los Angeles accounting service wants you to know about to avoid paying more than you need to. 

Operation Costs

Deduct costs from operating your eatery, such as the cost of food, ingredients, and assorted beverages. Supplies such as napkins, plates, placemats, utensils, tablecloths, and straws are also deductible, as are restaurant kitchen necessities such as pots and pans. Other operating cost deductions include chef and server uniforms, utility bills, rent or lease payments, maintenance expenses, insurance premiums, and marketing and advertising expenses. 

Charitable Donations

Any work your restaurant does for and with assorted charities comes back to you during tax season. Donations to homeless and women’s shelters, veterans’ organizations, and all other charitable initiatives are deductible; however, there are some calculations your Encino tax consultants want you to keep in mind. The total deduction must equal what you paid suppliers for ingredients, plus one half of the profit margin from a selling standpoint. That deduction half cannot exceed what you would have made if you had sold the food in your establishment. 

Employee Meal Costs

Employee meals consumed on premise offer deduction possibilities. You can either add them to your total food costs or record each meal separately for write-off purposes. Team members subsequently do not pay taxes on them. 

Delivery Costs

If your restaurant delivers food and or provides catering services, write them off. As per the IRS, you get to deduct .58 cents per every mile you and your team drive. It’s also possible to deduct tolls, gas, and vehicle maintenance and repairs. And since restaurant owners can also write off employee wages with the exception of tips, you can deduct what you pay your workers to deliver goods and services. Such deductions are extra convenient if employee pay includes overtime fees. 

Get tax preparation assistance from Wallace & Associates, your accountant service in LA.