It is that time of year again—tax season, and in honor of the season, the Food Liability Insurance Program has put together a list of a few tax tips for small business owners.
You can deduct business expenses, including the expense of purchasing liability and business insurance. In order for a business expense to be deductible, it must be considered both ordinary and necessary. This means that it must be an expense that is considered normal for the industry, and it must offer your business an important (though not necessarily indispensable) benefit. Liability insurance usually falls under these categories.
Other business expenses you can deduct might include the expense of your inventory, office supplies, and marketing. The cost of expanding and improving your knowledge of your business might also be considered a business expense. For instance, if you went to a conference to learn more about marketing your food business, you might consider the cost of travel and lodging as well as the price of the conference all deductible business expenses.
For more information on deducting business expenses visit the IRS website.
Remember that you must keep records of all of your business transactions going back at least three years. This is essential in case you are selected for an audit. It will also make your life easier when it comes time to calculate your business expenses. After all, you don’t want to forget to account for costs and end up leaving money on the table.
Be honest and report your cash income including gratuity. This will protect you and your business in the long run.
Of course, we at FLIP are insurance experts and not tax experts, so if you have questions about these tips or need more information about preparing your taxes, consult an attorney or tax advisor.
If you would like more information about liability insurance for food vendors, personal chefs, or caterers, or other food business professionals, visit our homepage.
BY LYNDSEY LARSEN
Lyndsey Larsen is the Marketing Manager for FLIP and writes about business, marketing, entrepreneurship, and insurance.
Lyndsey Larsen is an experienced writer with a background in corporate communications and nonprofits, SAAS corporations, and nutraceutical companies. She has previously worked as a journalist for regional and national publications. In her spare time, she enjoys chasing butterflies, rockhounding, and spending time with her two kids in Utah’s mountains or deserts. Find Lyndsey on LinkedIn.