MARKETING FOOD ONLINE



26 Food Business TAX DEDUCTIONS!!

Posted by Damian Roberti on

I'm going to go over a list of 26 tax deductions that you could potentially take advantage of when you are starting a food business from home, or just getting started from scratch now really quick.

Disclaimer, I am a food entrepreneur. I am not an accountant. I am not an accountant. So take these 26, write that down, or get a copy of them on our blog post, I'll have a link down in the description section, print that up and bring it to your accountant and go over what potentially you could take advantage of. So let's dive right into it. Number one is the vehicle.

 

If you are using your vehicle driving to let's say Costco or Sam's, or even a local grocery store to pick up any type of ingredients or potentially getting equipment, you can use those miles as a tax deduction.

It is actually considered a use for business. So if you're using your vehicle and you're driving to, and from going back and forth to these places, make sure you, of course, keep your receipt and know how many miles you're traveling to the place. And then back to your home or wherever your re your retail spot may be as well. You can actually get 57 and a half cents per mile in tax deductions. Now in 2021, that goes from 57 down to 56 cents.

 

But remember if you go through the entire year and you've got several hundred miles, that money adds up quite quickly. Now, number two equipment. If you were buying any type of baking equipment mixers, spatulas bowls, it doesn't matter what equipment it is. But if you're buying that to use specifically for your home-based food business, that is an expense that can be used as a tax deduction as well.

Now, the fact that you weren't starting from a home, you've got quite a few deductions within the home itself that you can also take advantage of. So number three is your water usage. Yes.

 

The amount of water you use to clean your equipment when you're using it to Bay, the water bill every month, there is a portion of that. And again, go to your accountant and find out how much of that you can use.

But a portion of that water bill is actually deductible because it's a business expense, which helps you create your food product. So then it was actually counts as a business expense number for your electric bill.

Yes. Believe it or not, the electricity that you use in order for you to bake the products, make the products packet or whatever it is that you're doing. That portion that's being used specifically for business can actually be used as a tax deduction as well.

So of course, as you probably already do, keep your electric bill go to your accountant and let them figure out the amount of that, that, that could actually be used as a benefit when you start filing your taxes. Okay.

So number five, mortgage and rent. So now if you are out of home and you're actually paying a mortgage every month, and you have a, let's say a thousand dollar mortgage every month, a portion of that mortgage can actually be used as a business expense. If you're renting the location, same thing, the rent as well can be used and written off as a deduction because you're using the residence or that area for you year to produce a food product and operated food business.

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So number six, the home space, the whole office space. So yes, you're going to be using your kitchen for producing your product, but I'm pretty sure there's a portion of either a room, a separate room, a second or third bedroom somewhere where you actually have a home office, the amount of square footage of that office space can actually be used as a deduction while you're starting your food business from home and building it.

So keep that in mind, that amount of space that you're occupying it to operate your business online, pay bills on life and your business, answering calls, whatever it may be. If it's an office, you've got that portion, that space, you have the ability to deduct that as well.

Now, number seven, now this is a big one. It doesn't have to be brand new. It can be used, but if you buy a vehicle and the vehicle again is used for business expenses, a portion of that can be also written off as a tax deduction. If the vehicle is used for commercial purposes, such as business use. So if you have to get a new car, a new vehicle, it doesn't narrow. The search there necessarily have to be a 20, 21 or something brand new. It can be new to you, but you were purchasing it.

And let's say you spend $15,000 on a car that even though you don't pay it all the way up front, the amount of the sale price of the vehicle, bring that to your account and see how much of that they can write off as a tax deduction.

Because again, you're using the, that portion of, for a vehicle for business usage, number eight, website hosting. So if you have a website and you have a business online and you're operating and selling products and shipping them, whatever it may be, or if you're just selling a local and you happen to have a website, and you're not just up doing, e-commerce just yet the web hosting every month, which is anywhere from 20 to 30 or even $40 a month to host that that is actually awesome, an additional food or an expenditure that you can use because it's costing money to produce your product online and sell it to the website fee is also one that could be the deduction.

So number nine, transaction fees. So if you have PayPal, you have Stripe. If you are processing transactions online through your website, or even any other website or hosting platform, then that also counts as a deduction as well. So those fees that are taken out through Stripe or PayPal to process the transaction, those are additional fees too, that you need to keep track of.

Okay. Now most of them you could actually go to and print up a simple report in annual report at the end of the year to show the total amount of sales from that actual payment processor or the transaction process. Okay. So number 10, your internet and phone. Yes. Believe it or not a portion of your internet can actually be used as a deduction as, since you're using that to actually go online and process orders or answer emails that's used as a business expense.

Now, what I would recommend you do when it comes to the phone lines, if you can get it split up into a second one, get yourself a second phone line. This is a great idea because that specific phone line is dedicated to your business. So you don't have to go through phone calls or long distance calls and figure out what was for business. And what's not this way. You have a second line and you simply just say, Hey look, Mr. Accountant or Mrs. Accountant. This is my second full line bill. I use this specifically for my business. Now, next up, if you are, this is number 11. If you are self-employed and you pay your own health insurance, those premiums paid through your self employment.

Those health insurance premiums are also be deductible gift, keep track of what you pay for your health insurance. If you're not on your spouses or somebody else's insurance outside of yourself, employment.

So if you operate a business and you're making enough money and you pay that self-insured health insurance premiums, that is definitely something that you need to bring to your accountant.

You bring it to their awareness. So they can actually use that also as a deduction. Now, number 12, client meals. Now this was something that was actually amended recently, but you used to be able to get 50% of a meal. If you sat down with a client, now I'll give you an example.

If you actually run a cake business from your house and you meet with clients because you do wedding cakes and you go out and have lunch and you talk to them, you give them prices. You give them idea of what you can do. Those lunches, those gatherings, those fees that you pay for lunches and meals, whatever it may be.

You used to be able to get 50%. Now you can actually get a hundred percent until 2020 to 2022. You can actually get a hundred percent of that written off as an expense, because when you're meeting with clients or you're trying to figure out what kind of wedding cake they may need, that is actually used as an expense because you are on your time, the business time. And that is something that you need to be aware of as well.

Number 13 is travel for business. Now, if you go out of state or you go somewhere, or even within your state, you travel someplace and you have to stay over night and you have fees that are involved with meeting with a client that you're actually going to do. Let's say it again, another wedding cake, and it's a gigantic wedding, and you have to go somewhere to that.

So all that travel expenses for you to create that business and that sale considers business travel. So that those expenses, that expenses can also be used as a deduction as well. So keep track of course, receipts, receipts, receipts. You always want to keep your receipts. And that way you have a paper trail showing just that note.

Number 14 business modes and the interest. So if you have a business credit card and you pave and you buy, let's say equipment, you got a brand new fax machine and the brand new copier, a brand new laptop, and you put it on a credit card and it's a business card and you've been making payments, but you incurred interest. The interest on those credit cards.

Participant could also be used as a deduction, take that to your accountant and let them know that you've purchased products. You have items that are on a credit card that are business related, or even a loan that you've taken that you're paying interest on the interest is potentially also deductible as well.

So number 15, this one's actually really cool publications and magazines. If you actually subscribe to magazine, this is something I learned about just recently, I've been in business for 12 years. I didn't know this, but we do actually have a publications and information, entrepreneur magazines. We also have some subscriptions online. They're all related to our business, but publications and books and such that are related to your specific field.

You can't just get some type of a magazine that has nothing to do with your business. But if you've got something that is, you can actually write that off as a deduction too, because that's an expense for the business itself. So publications and magazines, 16 is educational courses. If you actually take a course online, and again, let's go back to the cake cake sample. If you're starting to bake cakes and you take some courses on how to decorate them, maybe how to market cake businesses online.

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If it's a course on how to start a business, selling cakes, all of those courses and those educational programs are actually tax deductible. So make sure you again, keep track of the courses and things that you're taking online, because that is another tax deduction. Now, next up, this is insurance. Number 17. You have a business insurance policy. You pay it every month because it protects you from the people who potentially get sick, eating your product. Now every premium that you pay every single month for your business insurance is tax deductible. Again, it is an expense to operate your business. So keep in mind, keep track of all of the monthly payments that you make on your business insurance. Okay? Number 18, your logo design. Now let's say you created a logo, like maybe like the shirt I have on here, but you have a cake logo for your cake business and you painted designer a hundred bucks, 200, $300 to make your logo.

Guess what? That's a tax deductible expense because that again is business related. So if you have someone creating a logo for you, print the receipt, if you do it online, or if you have a local designer, get a receipt, get an invoice. So you can actually deduct that everything related to creating your brand like a logo is of course deductible. So don't miss out on that one. There are 19 trademark fees. Now, of course, if you get a logo, you want to train market. Now, guess what? That's not free. Le Le if you have a legal team that helps you out with that, trademarks can be quite expensive. That could be a few hundred dollars, even a couple hundred dollars on the minimum. So make sure that the year that you have that done and you have your taxes done the following year, keep track of the fees.

If you have a lawyer work with you or somebody online the trademark fees and costs are very much, I deducted a PR item for your business. Okay? Number 20th, shipping boxes. So guess what, everything that you use to ship your products, boxes, tape, packing material, all of that is of course an expense keep track of how much you're spending on boxes, especially if you're running an e-commerce business and you're shipping out products every day, those box fees add up all of that packing material tape adds up. Trust me, I know our facility ships out thousands and thousands of boxes a year, and all of those tape and bubble wrap and newspaper print and all that stuff adds up very quickly. It becomes thousands and thousands of dollars. So anything related to shipping your product, make sure you keep track of those receipts as well.

Number 21, if you create an LLC and you do it online and there's legal fees involved, and there's a fee just involved with your filing of the LLC, that is a deductible expense as well, keep track of how much that costs you to incorporate your business. Now, if you create an LLC or a C corporate escort, the entity doesn't matter. The type of entity status doesn't really matter the expenses to create it. That's the most important part. So keep a receipt and let your accountant know that you just created your LLC this year. And now you need to make sure that you write that off as a deduction now, permits and fees. Number 22, permits and fees. Now these are like state County city. These are local fees, and these are also state filing fees. So when you create get your business license, which is different than creating an LLC, you have to have a business license to operate a business in the city or County that you're in.

That is also a fee, I guess, what is tax deductible? Because it's an expense. So as you create your business entity and you get it licensed within a city or County on top of creating your LLC, that is also something you need to keep track of because that's a big deduction as well. Number 23, something you may not think about. And actually the past couple of years, we almost slipped our mind because it was just not on our list, but all the advertising you do on Facebook, if you run a Facebook ad, guess what? That's advertising. Those are money. That's, money's going out the door to create more business. Those are fees that are, you're obviously paying to have a, an advertise on Facebook or even Google ads. If you run Google ads, guess what all of those fees are tax deductible, because that's part of your advertising campaign fund.

If you have a fun setup to advertise, which you should definitely something you need to keep track of. And also these are great because Google Facebook, you can simply go to the platforms, print up a receipt of all of those transactions and all of those fees. It really makes it super easy. Okay. So make sure advertising fees. Is that something that you took care of 12? Now this is a big one, and I'm glad if you've waited until this time and you're new, you're here on number 24 retirement accounts. Yes. Believe it or not. And I highly recommend you do this, please, because it will offset a tremendous amount of taxation. Okay. It has a huge plus when it comes to the tax time at the end of the year retirement account, yes. Individual SEP accounts, they're called S E P SEP IRA. You could do a simple IRA.

You could even do a solo 401k, but invest your money. Start to pay yourself. You have the ability to offset a large portion of your taxation, and you can grow that investment throughout the year tax deferred, of course, as it creates and generates interest. And you you have dividends that you potentially can buy more stocks with, but as you begin to grow that account, it actually has a huge financial benefit for you for you. So the SEP accounts called a SEP, okay. And a solo 401k you could get as well as I mentioned, or a simple IRA, the simple IRAs, which are the individual retirement accounts, get yourself set up with those because the faster you start doing that, when you start your business, 10, 15, 20 years from now, you'll have put away a lot of money. So definitely take advantage of that.

Number 25 Shopify or pay ability loans. Now, I don't know if you know this or not, but when you start to create an e-commerce business and you're selling products, and let's just say, you're using Shopify, okay. As you begin to sell products and generate funds and transactions through there, Shopify actually has these little micro loans. They don't do credit checks. It has nothing to do with nothing more than your transactions that have been put through your Shopify store. So let's say you did 10,000 a month. Shopify would approach you and send you an email and say, Hey, you qualify for a little mini Shopify loan. And it could be like $900. It could be 1200, it could be 2000, but these loans are given to you based on your actual activity within your store, they don't check your credit report has nothing to do with that.

That's one of the great things and reasons why you should sign up for Shopify and definitely check out the link down below. They have a 14 day free trial to even just take a look at their website, but you can make your own website with Shopify. And as you begin to generate sales, you can actually get loans from them. And what's really cool is they're not interest based. They're just a flat fee. Hey, you know what? Damien, here's $2,000. And let's just say it charges you 200 bucks, whatever it may be. Again, that's an example, but they base it on that. They don't have to do any credit checks or anything. Same thing with pay ability, pay ability is the company that we actually use for our Amazon store. So we have access to our funds every single day. We don't have to wait two weeks on Amazon in order to get paid.

And of course you can sign up for that too. There's a link down below. If you're looking to sell on Amazon, if you don't use one of those services, you're not going to get paid every day. You actually get paid every two weeks. Okay? So pay a bill has the opportunity to also get a loan based on your Amazon sale. So if you're selling on Amazon, for instance, and let's say you do $25,000 a month, they're going to say, Hey, Damien, you're eligible for $3,000 loan. Here's your $3,000. Okay, great. There's no interest. It's actually just a flat fee. So they're going to say, it's going to turn, it's going to cost you 500 bucks to get $3,000. Okay. This is just an example off the top of my head, but these are great little micro loans, but also tax deducted tax deductible because of the fee that they charge.

Okay. So if you have other types of loans where they charge interest, as you know, the interest is potentially deductible, but these are actually fees. So definitely take a look at that. So if you want to start a short, a store on Shopify, you can get a loan without actually kind of getting alone. I know that sounds weird, but it's true. Okay. Number 26, the last one. So if you're starting local and you're going to farmer's market, or are you going to a festival or are you going to a fare? You're going to a food truck. If you're going somewhere to promote your food and sell it, most of these places actually charge you a fee. Okay? Farmer's markets, aren't always free. They're going to charge you a fee. Guess what? Keep track of those fees, because those are tax deductible, too. Those are fees involved with you running and operating your business.

Even if you're local, you don't have to be online, but you go to local events and it's costing you money to do it. Or a percentage of your sales. Those are fees also potentially tax deductible. So those are 26. And now this isn't an all-inclusive. I'm sure there's quite a few others, but I definitely don't want to go on too, too much longer, but those are 26 that I could tell you are very important. You need to definitely take a list, this list to your accountant and let them be aware. Hey, I've got all these expenses. I started in business from home. How can this be beneficial for me? So if that was helpful as always, please to give me a thumbs up, if you have any questions about tax deductions and running a small food business and trying to get as much as you can back from the government in the right way. Definitely let me know down below. And if you have any other questions or if you know of any other deductions, tell us down below for our other viewers who are watching the video. So I'll see you guys on the next video.

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