You’re not alone if tax season fills you with dread. Don’t procrastinate filing your taxes because you’re apprehensive. There are resources available for New York hospitality businesses to put you in charge of taxes–all year round. A strong tax strategy is just one benefit to working with a skilled bookkeeper in your industry.
Restaurant accounting services will help you develop a tax strategy to save you money and give you confidence that your business isn’t overpaying. One of the best ways to ensure you’ve optimized your tax strategy is to take advantage of all the tax write-offs possible. Here are six tax deductions you may not know about.
If you’ve remodeled your restaurant, there are surprising tax benefits.
Under a recent “safe harbor” rule, the IRS allows restaurants and retail locations to deduct 75% of remodeling costs and capitalize the other 25%. A face-lift for your restaurant or tackling overdue repairs and renovations may be a crucial part of your tax strategy for the upcoming year.
When hiring new staff, consider Work Opportunity Tax Credits.
The IRS offers a Work Opportunity Tax Credit (WOTC) to companies that hire individuals from targeted groups who often face barriers to gainful employment. Your current employees may even fall into qualifying categories such as:
Vocational rehabilitation referral
Supplemental Nutrition Assistance Program (SNAP) Recipient
For every person your business employs from one of ten defined categories, you can claim 40% of their first-year wages. Companies can claim up to $6,000 against their business income tax liability or Social Security tax owed.
Staff meals, family meals, or employee meals are a deduction.
You can include employee meals as part of your food cost deduction, regardless of how your restaurant handles employee meals. Whether it’s a pre-shift shared staff meal or a credited meal during the employee’s shift, it’s crucial to keep good records of the food consumed for filing taxes.
Employee benefits are an essential source of tax deductions.
Any benefits your business provides to employees you can claim as a tax deduction, besides the WOTC. Typical benefits include:
Insurance and sick leave
Vacation pay and bonuses
By offering benefits to your staff, you can attract talented people in the industry while also lessening your tax burden.
Restaurants can claim professional service costs and fees.
When you pay professionals to help with the operation and growth of your restaurant, you can deduct the cost, such as:
Bookkeeping and accounting
Advertising and marketing
By hiring trusted businesses to handle certain aspects of your restaurant, your company will become more efficient while taking advantage of lesser-known tax deductions.
Pick the right strategy for deducting equipment costs.
Buying new equipment for your restaurant is always tax-deductible, but you have two options for how you claim that deduction. You can always deduct the total cost of the equipment for the tax year. However, you may opt to claim the depreciation of the equipment’s value over several years.
It makes sense to claim smaller items, such as office equipment, in a single year. But when you claim the depreciation of big equipment such as walk-ins or stoves, you’re able to have greater control of your finances in upcoming years.
For year-round tax strategies, work with Vilardi & Co, the restaurant accounting service that New York hospitality trusts.
Vilardi & Co is a New York bookkeeping and accounting firm specializing in the hospitality industry, including hotels, real estate, bars, and restaurants. Our top priority is to get our clients’ finances handled as promptly as possible to save them money as soon as we can. Part of our bookkeeping and restaurant accounting services is developing tax strategies to save you money and maximize deductions.