Well, it’s tax season, time again to go through the grudge and annoyance of sorting out financials in the hope of not getting screwed (or sued). Unless one’s really gotten all their stuff in order, or has someone else do it for them (so much cost though), this is quite the tough time for new business owners. Food Trucks in particular, with all the regulations and other annoying odds and ends they have to deal with, can easily find their first couple tax years filled with exemplary strife.
So we’ll be looking into the particularly important deductions and steps new truck owners should be aware of as you get into the yearly dig-ins. Let’s get started shall we?
Deductions
Before applying some of this, it may be best to contact a CPA if you don’t already have one, simply to see how much deductions one can apply from it.
For those in their first year, Start-up costs are a consistently available and must-have deduction to look into. You can deduct up to $5,000 each in start-up and organization (apparently the rules differ for expenses over $50,000, so it may be even more). This includes market research, advertising, employee training, travel and other costs.
Definitely keep track of Miles. Besides gas expenses, one can make deductions for all mileage that your truck traveled FOR WORK over the course of the year, so be sure to keep track of every trip as EXACTLY as you can (which may be too little too late at this point of the season, so try to round for now and attack it head-on next year).
Entertaining Staff or Guest Referrals at your house can lead to deductions, make sure to take PICTURES of the event with your Truck and/or logo in with them though.
If there has been any ‘Educational’ expenses that you’ve partaken in before or while starting the business to learn how to better run it (which, in a world full of people who haven’t even worked in a restaurant yet have tried getting into, is something they SHOULD be doing anyways), such as books, online courses, and seminars.
F
ood Testing expenses, keep track of all food purchases for those testing/tasting sessions held at your house before finalizing the menu.
Did you know there’s a ‘Restaurant Competition Form?’ If you eat out at any restaurant that you could potentially compete with, get ideas from, or apply to your truck’s research and development in ANY way, you can attach the credit card slip to this filled-out form and get more tax-deductable dollars for the business.
Mistakes
Putting your Taxes on Hold. Waiting ‘til the last minute is never good, especially with all the work truck owners have to do on a daily basis. Instead waiting to record EVERY receipt and expense in one session, which will take up a huge chunk of your time, it’s better to automatically input them into a ledger or one’s tax software as soon as they’re gotten. Or, if still within those last few weeks before the deadline, spread the work out over time; this will at least make sure you stay accurate and get ALL the deductions owed.
It can help to make a checklist of things to get done, questions you have, and deductions that you want to officially claim at least a week in advance before doing this.
Organization is a key part of this, so for the love of god don’t just shove all of your stuff in a shoe box. For everything that’s not entered into a system immediately, have folders with clearly defined sections in them for these different things to keep track of, or other computer files that you can enter stuff into at the end of a day or week. When the time comes, this information needs to be quick-to-hand and easy to sort through. Don’t make the same mistake as all those TV families we keep seeing…
On the financial side, make sure the FICA payroll tax deduction is subtracted from the State tax returns when the FICA tip credit is taken. Apparently this is oft overlooked… can’t fathom why (-struggles to stay awake-).
Important Notes
Expenses and utilities pertaining to Home Offices, which most truck owners are likely working out of, no longer have to be fully tracked. Instead, one can now simply take $5 of deduction off for every square foot of home work space (300ft Maximum).
If you’re ever at a point in the business where you have to weigh placing your budget towards advertising or participating in charity events, should be aware that Ad deductions are better than charity-based ones. BUT if you’ve participating in helping with disaster-relief-type scenarios, giving food to charities after these horrible events, you can receive some particularly special deductions (make sure to get at least a bit of press for it though, proof helps).
Handing the Baton
Many business owners simply hand all the work to a tax professional, and there’s no shame in this; it fully frees them up of all their time to work with the business and insures a clean, professional job.
That said, it’s a decision which will cost them extra money, not to mention the need to ensure that they find the right person who’ll be able to make the most out of their taxes for the year. At the end of the day, if you’re able to get things organized well on the side, with all information in front of you, you as an owner can easily and thoroughly complete this process yourself, making this decision unnecessary (another benefit, you actually see all the expenses yourself, keeping you closer to your financials. It’s good when you know WHAT and WHY things are).
Other Links
10 Essential Online Resources for Preparing Your Small Business – great list of software and net resources to use in your tax prep and completion
Mobile Cuisine’s Tax Pages #1 , #2, and #3 – they’ve written a few things on the subject, which were really helpful in writing this.
Top 10 Small Business Deductions – some more fun, specific deduction to look into.
Disclaimer: Consult a tax professional for advice that is specific to your unique situation.
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