While owning a restaurant is profitable, you also face losses throughout the year. One of the biggest concerns for restaurants at the end of every year is lost money due to food waste. While food waste is inevitable, it doesn’t have to be a complete loss. You may be able to take advantage of deductions during the tax season.
Track Your Food Waste
Do not forget about your food waste. Track every loss. When you track your waste, you can plan your inventory better. You should take steps to minimize food waste throughout the year. To accurately track your food waste, you could prepare a report of the inventory you used and the inventory that you sold.
Deduct Your Food Waste
It does not matter whether you sold the food or if you had to throw away the food. As soon as you purchase food for your restaurant, it turns into a normal business expense. Deducting the food that you purchased for your restaurant reduces your taxable income.
While there is no separate food spoilage tax deduction for thrown out or spoiled food, you can still deduct the food that you purchased. Food waste may be lost money, but you can recoup a percentage of that loss through your tax deductions.