There are two things certain in this life: death and taxes. Restaurateurs, like other business owners,
have to worry about personal income taxes as well as those related to their
businesses. While this may seem
overwhelming, it’s important to keep in mind that tax time is only once a year. And by following these tax tips, restaurant owners
could come out on top.
Check Work Opportunity Tax Credit Requirements
Whether an employee serves customers all day or just cleans the
restaurant booth furniture at the end of the night, having them on the payroll
could result in huge tax savings. The
Work Opportunity Tax Credit (WOTC) is a credit that could net restaurateurs up
to $9,600 thanks to their hired employees.
In fact, restaurant owners should always check to compare their
employee rolls to the list of workers who make businesses eligible for the tax
credit. This could include low-income
veterans, food stamp recipients, ex-felons and a variety of other individuals.
Tax Credit for Employee Tips
Any restaurateur who has servers on the payroll has undoubtedly noticed
that they have to pay taxes on their employees’ tips. This, of course, is in addition to the taxes
that the employees pay themselves. That’s how taxes work when it comes to FICA and tips.
Fortunately, this money may not be gone forever. Restaurateurs in this situation may benefit
from the FICA tip credit. If a
restaurant owner paid FICA taxes over the federal minimum wage for their
employees, they can receive these payments back as a credit. This could literally mean thousands of
Assess Property Taxes
From fancy restaurant booth furniture to old commercial restaurant
equipment, property taxes extend to much more than just real estate and
buildings. Every year, restaurateurs
have to pay taxes on the assessed value of their company assets, and many take
the easy route of simply paying the same amount each year.
Even if their property ownership doesn’t change over the year, however,
this can be a mistake. Assessed values
of property can change, and if a restaurant owner isn’t taking the time to get
updated numbers, they could be losing thousands.
Consider Making Charitable Contributions
Many may not realize it, but a great way to fill up restaurant dining
tables is to make charitable contributions. By sponsoring philanthropic events, or even donating to charity, a
business will attract patrons who admire social responsibility.
In addition to bringing in more customers, a tax credit on these
contributions is also likely available. While this probably won’t net any positive income, since a restaurateur
is spending money to contribute, it never hurts to do a little
good to help the local community while impressing potential future
Most restaurateurs know going in that they’re going to have to deal
with taxes. Fortunately, it doesn’t have
to be as bad as one imagines. With the
right accounting help and a little of the aforementioned knowledge, tax time
can be as painless as possible – and maybe even a little exciting as tax credits
start to pile up.