Tax Deductions For Restaurant Owners

The holiday season is a busy time for restaurant owners and tax time will be here before you know it. Here are four tax deductions for restaurant owners to help you optimize your tax return in the New Year.

Utilize the Safe Harbor Tax Laws.

The Safe Harbor guidelines allow retail and restaurant owners to deduct 75% of qualifying expenses paid to remodel or refresh buildings and capitalize the other 25%. This simplified the process of determining what expenses should be deducted for repair and what must be capitalized as an improvement. Therefore retail and restaurant owners could be able to deduct the cost of remodeling by treating 75% of the cost as an ordinary tax-deductible business expense and depreciate the other 25% over the next several years.

Take Advantage of the Work Opportunity Credit.

The Work Opportunity Tax Credit is a tax deduction for restaurant owners that many don’t take advantage of. If you hire individuals from target groups that have significant barriers to employment you probably qualify for this tax deduction. For example, hiring unemployed veterans, the recipients of food stamps or other public assistance, individuals referred by vocational rehab services and/or former felons will qualify your business for the Work Opportunity Tax Credit.

Employee Benefits are Deductible.

Salaries aren’t the only employee expense that’s tax deductible. Employee benefits such as healthcare, sick leave, and vacation pay are also tax deductible. In addition, if you give your employees a meal with each shift this is a tax-deductible “employee benefit” as well. However, as a business owner, you should be careful taking these deductions for yourself. Even if you collect a regular paycheck the IRS won’t allow profits from a business paid to the business owner to also be used as a tax deduction.

Section 179.

Section 179 of the IRS Tax Code allows business owners the ability to deduct the entire cost of financed business equipment in the current tax year.  However, there are some stipulations. First, the item must be within the specified dollar limits of the Section 179 tax code. In 2017 write off limit is about $500,000 per business. Second, the business must begin using the equipment during the current tax year.

At USA Tax Prep Plus, we have the knowledge and expertise to manage your business’s taxes. Contact us today to see how our team can help yours.