Is a Food Truck Tax Deductible

Posted by Damian Roberti on May 21, 2022

Is a Food Truck Tax Deductible

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Is a food truck tax deductible? How much does a food truck depreciate in this video? We are going to go over food truck tax basics. I'm going to give you five specific, but very big tax deductions that you can take for your food truck business here on food truck freaks. We're going to get you that right now.

Welcome back, food truck freaks. We are YouTube's food truck and entrepreneur channel, all dedicated to the food truck industry and creating for you guys a successful food truck business. If you're brand new to our channel, definitely hit the subscribe button. We have dozens and dozens of videos. We'll be uploading every single week with all kinds of great resources to help you get started. Now, in this particular video, we are actually answering an email question that we got from our other YouTube channel that was actually marketing food online. Definitely check out the links down below. We have multiple other food entrepreneur channels, but we got an email from someone who was looking to create a food truck business but wasn't sure about the taxes and what he could actually take and deduct and depreciate. So I wanted to go over five specific things which most food truck startups may or may not have actually thought of but could be hugely beneficial for you for tax purposes.

So, as many food truck owners know, basic regulations and rules differ significantly from state to state, even from your city to city and neighborhood to neighborhood. Every trailer, food truck, and kiosk, on the other hand, is obligated to pay taxes. So the type and quantity of money that you'll provide Uncle Sam is determined by a number of criteria. So I'm going to give you a list of five specific things that you need to look for. So, number one, and this is not in any particular order because, honestly, all five of these are equally important.So make sure that you take some notes or bring this up to your accountant and run through a handful of these and let them know what you've got as far as tax deductible items. So, number one, of course, it's the food truck equipment now, large food truck equipment depreciation. You'll need a lot of expensive equipment.

Is a Food Truck Tax Deductible

Of course, when you establish your food truck now, which might cost you anywhere from tens of thousands of dollars up to maybe even a hundred grams, anything from ovens, ranges, grills, generators, and other significant pieces of equipment must also be considered in addition to the up-to-code refrigeration systems. While these are big, one-time tax deductions, they are feasible for certain things, and experts actually recommend this. This is of course, not any accountant's advice. I'm not an accountant, so I'm not giving you accounting advice. So make sure you take this information to your accountant too. Experts actually recommend depreciating these expensive, expensive pieces of equipment over a few years to maximize tax benefits. Now keep in mind, if a piece of equipment costs more than $500, depreciate it over time rather than entirely at once, which is a really good rule of thumb. Number two, food truck events traveled.

So if you're going to different events across the nation, across the country, or even across your state, it doesn't matter. Although many food truck operators stay in their immediate neighborhood, others travel across the country to participate in huge food truck festivals and competitions. So each year, hundreds of these events take place across the country, and attending them can actually help you land some really big clients and perhaps land a spot on one of the lists of the best food trucks in the country. But when you're traveling, you've got to keep in mind, of course, crossing state lines, necessities, and paying for other hotel rooms. If you're looking for meals, not to mention even gas, you can deduct these expenses from your taxes each year. If you keep track of them, including receipts and departure and return dates, make sure that you keep a log of everything that you're spending and, of course, receipts to prove it.

Is a Food Truck Tax Deductible

So as you travel from state to state to do these different food truck events, all of those are expenses related to your food truck business and are tax deductible. So remember to track the events, locations, and the titles of the events as well. All of this, to the names of the events, because that gives you kind of a paper trail so that when your accountant says, Hey, Damien, you know what? You traveled here and here. What, what were the names of the events? Where was it? What date? So you can prove that you've obviously been there. Now, keep in mind that your expenses will exceed the cost of the festival. So keep receipts and account for each of these expenses when you're calculating the total cost of the event as well. There are now additional costs for gas and lodging.If you're at a hotel or motel, if you're not obviously sleeping in your food truck and food during the event, such as entrance fees, licenses, or permits that you might need for that event, even though it's in another state, that too is a tax deductible expense, number three.

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So the day-in and day-out use of your food truck, by the way, is hugely tax deductible. Okay, What does that mean specifically? Damien, So, vehicle-related expenses are unavoidable while operating your food truck. So, these tax deductions can be claimed in two different ways. Actually, you can deduct either the usual mileage rate or the tax-related expenses relating to your food truck. Keep track of maintenance payments, such as let's say you have an oil change. Gasoline costs, if you're changing tires or you're maintaining your tires in toll parking, if you're traveling and you have tolls, all those expenses for the tolls that you're traveling on the highways, those are also expenses. If you prefer to deduct vehicle-related expenses, keep track of those. If you want to deduct mileage, you will be paid a set amount per mile. Now, normally this is around.

Is a Food Truck Tax Deductible

I believe it's 50 to 55 cents or somewhere in that range per mile. And that's a lot. So if you're traveling a hundred miles, 200, or 300 miles, 50 cents per mile adds up. So make sure to ensure the accuracy of this though. You will need to actually keep track of your own miles. Some business owners keep track of both throughout the year and then claim the one that provides the largest tax reduction at the end of each year, which is a great idea if you want to save the most money. So there are numerous apps, by the way, even for your phone, that are available that can assist you in keeping track of your mileage throughout the year. Definitely check and take a look at those food truck apps and those for mileage number four, your food truck insurance. Yes, you must obtain, of course, many forms of business insurance.

As the owner of a food truck, to protect yourself, of course, the people who work for you and even your business, the four most common types of insurance are number one, the mandatory policy coverages for any damage or liabilities; If you're involved in a traffic collision, of course, while you're driving your food truck. So it's very similar to auto insurance, which is going to cover you in case your food truck ever gets into any type of damage or even an accident with general liability. In order to obtain the proper license to operate your truck, Most states actually require this type of coverage. It protects you against any damage to property or personal injury caused by your company.

All right, so next up is property insurance. Another suggested pro product is property insurance. Now this actually protects your truck and its equipment in the event of an accident or even theft, vandalism, or damage due to theft. This is something that property insurance will definitely cover for your food truck. Now, if you're hiring people and you've got employees, of course, you're going to need workers' compensation insurance. This insurance is actually normally required if you employ anyone, and it protects your employees in the event that they are injured on the job within the food truck. Medical expenses are lost wages and frequently covered by this type of coverage. So you definitely want to include these in your insurance list as well. Lastly, number five, is the cost of actually operating the food truck. So food trucks have a variety of constant expenses. Of course, as you may or may not know, it's not something that you just kind of set it and forget it.

Is a Food Truck Tax Deductible

The most obvious being the cost of the actual food you're serving. The secondmost common expense is rent at a community or commissary kitchen, or commercial kitchen, as it is known. Now keep that in mind too. This is actually really important because most states require food trucks to have an anchored commercial kitchen, meaning that they have to be attached to an actual physical address of a commercial kitchen, where you're either preparing your ingredients or You're emptying out your dirty water for the day. You're sanitizing your truck. You're getting rid of trash and garbage. All that's done normally at a commissary kitchen where your food truck must be attached to these day-to-day items may not seem like a big ticket tax deduction, but they can actually add up very quickly. You should definitely remember number one: condiments, beverages, and food.Okay, so obviously your food itself, the ingredients themselves, beverages, if you're serving those or just selling premade, prepackaged beverages, condiments, think of that like sauces, hot mustards, ketchups, mayonnaise, all of these things, these little tiny things, they all add up, but of course, the day to-day operations of your food truck, they are important.

cooking equipment, paper plates, napkins, or utensils. So small wears, as they're known in the food industry. These are things that are disposable. If it's the packaging for your food product that you're selling through your food truck, all of that is, of course, expenses related to it, whether it's advertising or marketing. So even if you're running marketing ads on Facebook to promote, you know, an event that your food truck is going to be at, all of those advertising and marketing expenses, whether they're a couple hundred dollars a month or a few thousand, all of them add up and are tax deductible, commissary rental.So if you're renting a commercial kitchen or commissary kitchen for your food truck, that could be anywhere from a few hundred dollars a month to a couple thousand dollars a month. And those, mostly, as I just mentioned before, are a must.

Is a Food Truck Tax Deductible

You have to have your truck attached to one. So those are also expenses which are considered tax deductible. Now, of course, if you have employees and you're paying them, obviously the salaries and benefits, if you've got any type of retirement account, or if you've got other benefits that are related to them, working with you, those are things that you need to bring to your accountant and let them look at for potential tax deductions. Now this is something that's really, really interesting, and this actually goes across the board, not only for food trucks, but any type of food industry, continuing your education through online courses, classes, digital downloads, digital files, books, anything related to you, bettering your food truck business, and bettering yourself to make your food truck business better. Those can be tax deductible. I'm not other people don't realize that, but if you have a certification program that you have to take every year, and let's say it costs you a hundred dollars, 150 bucks, whatever it may be.

And let's say all of your employees have to take that. All of those are expenses. You need to keep track of them very important, because that allows you to deduct those on your taxes too. You need safety training classes, safety courses, things that are required or not required, and you are putting your employees through them. Well those classes or courses, whatever it may be, if you're paid for that, then that's part of the expense. So keep in mind these five really huge tax deductible items that you can necessarily deduct every year, bring them to your accountant, let them know, Hey, this is a list of a few things. Did you know, I could do this and this, how do I get that onto my taxes? So I can use that as an expense. And that would definitely help you guys out. So those are the five food truck tax deductions that really wanted to bring to mind, especially for that email that I got from when you subscribers. And if you have any questions about your food truck business, let us know down in the comments and we'll definitely get to it as soon as we can. We'll see you guys on our next video.

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