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11 tax deduction tips for cafe and restaurants

- July 27, 2020 2 MIN READ

There are a host of tax savings that are available for savvy cafe or restaurant operators – and they don’t need to wait for the end of the financial year. Keep an eye on these expenses that are often overlooked, writes Ken Burgin, SilverChef hospitality expert.

Here are my top tips to make the most of your deductions

  • COVID-related expenses are top of mind

extra signage, sanitation equipment, screens and staff training. Add these to your application for one of the many small business grants offered by State and Local governments.

  • Are you making donations?

Many cafes and restaurants are generous with community giving and COVID support programs. Charitable contributions should be backed up by a receipt from a registered charity. Donations to sporting groups and schools are a great initiative but are usually a marketing or advertising expense, as they don’t have charitable status.

  • Invest in online rostering and payroll systems

This allows you to track wage costs to the minute – it’s your most significant single expense. These systems cost very little compared to the cost of flabby rosters and untracked hours.

  • The $150,000 instant asset write-off for equipment

If you have money to invest in new equipment now is the time. The instant asset write-off allow you to claim the entire cost of deductible business equipment if purchased before 30th December 2020, instead of depreciating the value over several years.

  • Renting to buy

This is a good option for new or used equipment -It is also a tax deduction, and helps to preserve your capital. The COVID crisis has taught everyone about the importance of having savings and working capital available.

  • Add online food & beverage ordering to your systems

Then integrate this with your bookkeeping – it’s your second largest expense, and most suppliers are ready to deal with you online. Now you’ll be able to watch it much more closely.

  • Self-education

This can be claimed as a personal expense if it’s directly connected to your work. There are plenty of short online courses in business and time management, now more relevant than ever.

  • Vehicle expenses

Are you claiming everything for your vehicle’s depreciation and running costs? There are different ways to claim motor vehicle deductions for a car that’s part private and part business use. Find out which method gives you the best tax savings, and work with your accountant to maximise the benefits.

  • Any out-of-date liquor?

If it’s never going to be used (even for cooking), there may be a case to write down the value to zero. Be ready to justify what you’ve done, but it’s well worth checking.

  • Ditch old equipment

What about old equipment in your storeroom? You can probably write off the depreciated value of that microwave, mixer or blender that no longer work. If it’s not in use, clear the decks and claim a deduction.

  • Upgrade your accounting solution

Is it time to upgrade your bookkeeping system so you can track expenses more easily? DIY systems like Xero or MYOB are popular and easy to use, but need to be set up professionally – classification mistakes are common and could mean you pay more tax.

Don’t forget to stay friendly with your accountant – they usually like calling in for a coffee! Keep up the conversation throughout the year for plenty of money-saving advice.

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