5 Tax Breaks Restaurant Owners Can Take Advantage Of

It’s the time of year, again. Tax season. Business owners and employees alike are trying to figure out how kind, or cruel, Uncle Sam is this year. Fortunately, for restaurant owners, Congress passed a handful of new laws that ease the tax burden for small business owners. Here are five tax breaks that restaurant owners can greatly benefit from, if you qualify.

Expanded Section 179 Deductions

In September, President Obama signed the Small Business Jobs Act of 2010 into law. The law doubled the amount business owners can expense on their tax return. The section 179 deductions were increased from $250,000 to $500,000 for property that was put in service in 2010 and 2011. Basically, you can write off up to half a million of new equipment expenses or anything else that qualifies as a 179 deduction.

Bonus Depreciation for Qualified Property

In addition to the increased 179 deductions, restaurant owners can also take a 100% bonus depreciation on new equipment or software placed into service between September 8, 2010 and December 31, 2011. This is part of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act that Congress passed in December. This helps you recover the investment costs faster.

Tax Break for Hiring New Employees

In March, Congress passed the HIRE Act which exempts employers from paying their share of Social Security taxes on qualified employees. The exemption is only for new employees hired between February 3, 2010 and January 1, 2011. The new workers had to be unemployed or work less than 40 hours a week for 60 days prior to employment. For each new employee who falls within this category, the employer qualifies for a $1,000 tax credit per employee.

Tax Break for Leased Building Improvements

Another part of the Small Business Jobs Act allows lease holders to write off up to $250,000 in building improvements. So, if you lease your restaurant space and made any improvements, you can write off the cost.

Tax Break for Entrepreneurs

For new restaurant owners, who set up shop in 2010, the Small Business Jobs Act allows these entrepreneurs to deduct up to $10,000 in start-up expenses. This is double the amount of the previous year and is designed to encourage new business ventures.

With the government doing everything it can to create new jobs, restaurant owners are among the groups benefiting most from new tax breaks. However, talk to your accountant and make sure everything gets itemized on your tax return correctly, because you can bet the IRS is going to be keeping an eye out for anyone who tries to take advantage of the new tax incentives.

About the Author: Monica is a marketing coordinator at Food Service Warehouse, a restaurant equipment and supplies web store.

Photo Credit: the russians are here

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