Tax Tips For Hospitality Businesses

The hospitality industry is aware, maybe more than most other industries, that additional taxes and fees are frequently placed on establishments like hotels and restaurants for things like lodging and other outstanding expenses.

There are specific actions you can do to better manage your tax load, despite the fact that these taxes may appear to be overwhelming and cannot be avoided.

There are a variety of tax breaks that are offered to professionals that work in the hospitality business, such as chefs, waiters, bartenders, kitchen staff, and others in similar roles. When you work in hospitality, you often have to put in hours when everyone else is having fun.

Deductions for expenses related to hospitality allow you to keep more of the money you've worked so hard to earn, but you can only benefit from them if you understand what they are and how to file for them.

Working in hospitality is not a simple profession, regardless of whether you want to be a waiter, event manager, barista, or mixologist. Translation of drunken ramblings and temper outbursts over incorrect orders filled several sleepless hours. Weeping chickens, rambunctious bucks, and remarkable instances of family dysfunction all included.

You have kept your cool, given advice, cleaned up the mess, and smiled through it all; it is now time for you to receive some sort of reward for your efforts.

It is time to get a respectable portion of the money you have laboriously earned back from the ATO. Therefore, let's discuss the most prevalent tax deductions and point out a few misconceptions that people typically make. We'll assist you in ensuring you get it correctly.

It is that time of year again, and we are all familiar with the sense of preparing ourselves for the yearly trip to the accountant in order to file our tax returns. The difficulty of gathering all of the necessary paperwork and looking far and wide for those lengthy and misplaced receipts can at times become overwhelming.

Have you ever given any thought to the question of how you should best prepare for an appointment so that it goes off without a hitch? Well, now you can… It's not complicated; the secret is in the preparation.

We understand that filing taxes can feel like a burdensome chore at times. When confronted with the necessity of compiling the appropriate documents and receipts and making sense of what can and cannot be claimed, a lot of people have a tendency to write off the work as "too difficult." What steps do you need to take to guarantee that you are ready when it comes time to file your taxes?

It is typical practise for individuals to look for tax rebates on work-related expenditures they have made within the preceding calendar year when tax season rolls around. You need to have done the appropriate tracking of payments throughout the year and have a crystal clear grasp of what it is that you are eligible to claim in order to guarantee that you are prepared. Your tax agent ought to always serve as the point of reference for this guidance.

When the end of June rolls around, it is helpful to have a routine of recording your spending and keeping proof of purchases in place from the beginning of the new fiscal year. This will help alleviate the concern and stress that you will have when the time comes.

Mark Chapman, Director of Communications for H&R Block, told Goodman Fielder Food Service that employees should start getting ready on July 1 because "as you go through the year, every time you spend on something that corresponds to your job, you need to have a record of that expense." "You should be making preparations from July 1 because as you go throughout the year, each dollar you spend on an item that corresponds to your job you need to have a record of that expense," Chapman

"If you are disciplined from the beginning of the financial year, you will not have that last-minute worry, and everything will be properly sorted and ready for tax time."

The Australian Taxation Office (ATO) states that in order to be eligible for a deduction relating to work-related expenses, you must be able to demonstrate that you personally incurred the costs, that you were not repaid for those costs, and that you have documentation to support your claim. According to Mr. Chapman's explanation, "the rule is that you can't claim the expense if you don't have substantiations."

How To Lower The Tax Bill For Your Hotel Business

According to what Renae Smith has said, it is not necessary to make major financial investments in your hospitality business in order to achieve significant tax deductions for the current fiscal year.

One of the most widespread fallacies concerning ways to reduce one's tax burden is the notion that one must incur a significant financial outlay in order to qualify for more advantageous tax deductions.

Spending a lot of money on machinery could reduce your effective tax rate; however, if you don't do it in the right way, it could mean that you wind up with less money in your bank account than you had anticipated.

In the hospitality industry, what are the most effective strategies for lowering one's overall tax burden?

The power of knowledge

It is essential to have as much information as possible regarding your company, its structure, and its entitlements. This is true for virtually every facet of life.

Do you, for instance, understand whether you are conducting business as a sole proprietorship, a partnership, a trust, or a company?

When it comes to the end of the fiscal year, each has its own set of tax entitlements and options; however, if you are unaware of what you should be keeping track of, it is simple to end up paying more than you should have to.

Be cordial with your dates

The thirty-first of June will be a Sunday this year.

In order for payments to be deducted from your 2018-2019 financials, payments will need to have cleared from your accounts before that date. This means that you should finish making any payments that you want to include well in advance of the 30th of the month.

The same is true for any payments that are made into a superannuation fund for employees.

It is recommended that you settle them at least one week before the end of June. This will allow you to ensure that the cash have been transferred out of your account prior to the close of business on Friday, June 28, 2019.

Take a stock count

You are not permitted to claim a complete deduction for the stock that you have purchased but have not yet sold. However, you are permitted to price that stock at the current market rate to sell it, which is, for the most part, a lot less than what you paid for the stock in the beginning.

The words "stocktake" are guaranteed to induce feelings of dread in any company's employees, despite the fact that there exists a small business concession for stocktaking that the majority of businesses are unaware of.

For those contemplating financial security, enlisting the services of a knowledgeable financial planner can bring clarity and peace of mind to your financial journey.

The vast majority of businesses are exempt from the requirement that they carry out a formal stocktake since they are able to make an assessment of the cost of their stock instead. However, when questioned by the ATO, these estimations will need to be justifiable.

You also need to check that the discrepancy between the stock at this time last year and the stock at this time this year is less than $5000. In that case, a thorough inventory must be carried out.

Deduct, deduct, deduct!

When it comes to the more manageable costs of running their businesses, many hospitality businesses fall short.

When added together over time, the tiny monetary costs of a few dollars here and there add up to a significant amount.

Be sure to keep track of all of your purchases when you run out to get things like paper for the printer, adhesive tape, or even ingredients for a last-minute meal. You'd be shocked how quickly the little things can mount up.

It is also crucial that you have a solid understanding of the other expenses that you are eligible to claim.

Even though you are unable to deduct the expenditures associated with driving to and from work on a daily basis, you may still maximise the amount of money you save on taxes by keeping a diary of the number of kilometres travelled whenever you use your car for work-related purposes.

Because your wages, insurances, rent, power, gas, furniture, laundry, cleaning, and marketing costs are fully deductible, you need to make sure that you keep track of them all. You should also keep track of any subscriptions, website fees, donations, and the value of any goods that you own that are decreasing in value.

If you run a hospitality business, you can save money on your taxes by taking advantage of a wide variety of deductions, but if you aren't totally conscious of what else you can claim, you're probably passing up some opportunities.

Are you accrual or cash?

Your taxes and GST can be computed using either a cash basis or an accrual basis, depending on your preference.

Due to the fact that the majority of hospitality businesses operate on a cash basis, it is crucial that you inform your accountant about any unpaid debts as of the 30th of June, 2019. Your accountant could be entitled to include these in the financial deductions for the current year.

It is high time that you got in contact with your accountant if you are confused as to whether you are operating a cash or accrual system in your business.

Organise a coffee date with your accountant

As was just mentioned, having knowledge grants one power.

Who else but your accountant is in the best position to share their expertise with you?

Accountants are responsible for a wide range of enterprises, and the more they know about your organisation, the better they will be able to provide a service that is tailored to your specific needs.

Have a conversation with your accountant in which you describe what you do, how you manage your company, and the record-keeping practises you now employ.

Be receptive to new ideas and proposals regarding how to improve the management of the financial aspects of your company, and seek professional counsel regarding issues such as reorganisation, payroll, and record keeping.

When it comes to tax deductions, the basic rule is that anything that has to do with a business is deducted. However, you will typically be needed to provide a certain amount of evidence to prove that the expense was business-related.

If you are aware of the most effective strategy to manage the financial aspects of your company, you will have the ability to make the appropriate choices and prevent overpayment.

What Records Must I Maintain?

If you want to obtain a good tax refund, you need to keep impeccable records and have a thorough collection of receipts. If you want to get a good tax refund, you really have to remain at the forefront of your receipts and have a broad selection of receipts.

It is a good idea to devise a straightforward and trustworthy method that will assist you in staying on top of this matter throughout the year.

It is allowed to preserve a digital version (such as a photo of a receipt or an email receipt) as long as the following information can be read clearly: You are not required to save physical receipts, and it is okay to do so.

• The name of the company that supplied it
• The total amount that will be spent
• Characteristics of the product or service
• When the expense was really paid for
• Document's creation date

In addition, you are not need to preserve receipts for any expenses that are under $10 (so long as the total amount of these charges does not exceed $200).

Tax Tips:

1. On January 1, 2015, new requirements under the Affordable Care Act went into effect. Employers are responsible for maintaining additional records and filing additional reports. Employers with 100 or more full-time similar staff (FTEs) will be subject to penalties if they do not comply with the new health care requirements. In 2015, employers with fifty or more full-time equivalent employees (FTEs) will be required to collect information in order to fulfil informative reporting requirements by the end of the year. Caution should be exercised by smaller businesses because the "common control group" guidelines can merge numerous locations in order to get the amount of FTEs into the relevant range.
2. Make use of tax credits to bring down your total obligation – The job opportunity credit will be available till the end of 2014. Businesses that employ members of "targeted groups," such as veterans or members of families that have received certain government benefits, are eligible to claim a tax credit that can be applied towards their overall tax liability. Restaurant owners continue to profit from the worker tip credit, sometimes known as the FICA tip credit.

If you are employed in the hospitality industry, particularly as a chef, you have the right to file a claim for cooking hardware that you have bought and used within the scope of your day-to-day responsibilities, so long as your employer did not supply or reimburse you for the equipment in question. We have provided the following list as a reference to serve as a guide for potential tax reimbursement options:

• Knives and tools for sharpening them;
• Utensils for hand help in the kitchen, such as spoons, and other similar items;
• Tools such as graters, mandolins, and slicers;
• Home electronics, including food processors;
• Cookware such as saucepans and steamers;
• Cooking dishes;
• Containers and pans for baking;
• Piping equipment;
• Dinnerware and drinking glasses;
• Blocks of wood for chopping;
• Costs associated with the repair or maintenance of work tools and equipment
• Costs associated with renting tools and equipment for use in the workplace;
• Books, magazines, and newsletters pertaining to the culinary arts.

In addition to the tools necessary to carry out common activities in the kitchen, you may also be able to deduct the cost of uniforms or other work-related clothing.

Whether it is a mandatory uniform that has your venue's logo on display or the standard chef's pants, jackets, and hats, you can deduct them from your tax statement as long as they were purchased in that fiscal year. This applies even if the logo is on a mandatory uniform that has your venue's logo on display.

If you wear a brand uniform for work, eTax states that you are eligible to deduct up to $150 in washing charges even if you do not have receipts for those expenses; nonetheless, you are required to have receipts available. If a receipt is shown, a chef is permitted to wear, in addition to the usual chef's uniform, shoes with non-slip soles and steel caps, hairnets, gloves, aprons, and goggles are also permitted.

What Will Happen If I Err on My Tax Return?

It is OK, and we are aware that something like this can occur to anyone, but we urge addressing the issue as soon as humanly possible. This is always the most effective course of action.

When submitting your tax return, it is imperative that you take a lot of care in pulling together all the details and supporting documents, and that you only claim deductions that are legitimate in order to avoid penalties and maybe even prosecution from the ATO.