6 Expenses Restaurant Owners Often Overlook At Tax Time

As a business owner, you're always looking for ways to maximize your profits and minimize your costs at the same time. Your restaurant business keeps track of expenses throughout the year in anticipation of tax time so you can maximize your deductions when you file. Take a look at these 6 expenses that restaurant owners often overlook when tax time rolls around.

Meals For Employees

If your business offers employees free meals during their work shift, you may be able to deduct this expense at the end of the tax season. This applies to full service sit-down meals, fast food, and even coffee shop pick-me-ups. These meals are also not taxable to your employees.


Many restaurants often donate unused food to homeless shelters or other community organizations. If your restaurant participates in any of these types of donation programs, you can benefit from this tax benefit yourself in April at tax time. As long as the organization you are donating to qualifies under section 501, you can claim an enhanced deduction.

Holiday Parties

Do you celebrate Christmas with an annual party, or other type of celebration during the year?  If so, make sure you deduct those costs from your taxes. Make sure the party is benefiting only your employees and not their friends or regular customers. Spouses and significant others can be included though.

Gifts For Employees

Many businesses give employees a Christmas gift of a ham or turkey. If you give your employees an annual gift, make sure the individual value does not exceed $25. These gifts qualify as a business expense and can be deducted. However, gift cards are considered money and cannot be deducted and must be considered taxable income for your employees.

Vehicle Mileage

Part of your restaurant business may have employees delivering food, picking up supplies, and driving to catering sites. If so, you can deduct a standard mileage rate of 50 cents per mile from your taxes. Just make sure you are keeping track of miles driven by you and your employees only for these business purposes.

Employee Benefits

All those benefits you pay out for your employees are tax deductible. These include health insurance, vacation pay, and sick leave. These can add up to a substantial deduction amount.

Your restaurant business may be able to deduct some or all of these expenses from your taxes, helping you maximize business profits and minimize costs. Talk to an accountant, such as those at Watson & Company Inc., to see how.