Updated June 2018
What could be better than writing off a great trip to a place you’ve always wanted to travel, and making money while you’re there? How about writing off food??
Ok, food may be a distant second to traveling, and we’ll talk about writing off trips in another post. But, writing off meals is a great way to decrease your tax burden over the course of a year (every little bit really does add up). Yes this sounds too good, so what are the rules?
Most meals can be written off 50%
The meal has to be business oriented, and it’s best to make a note about the meeting on the receipt for your records (who it was with, your business relationship to this person, and the business purpose of the meal – a couple words about what was discussed). The types of meals this might include:
With clients/customers or vendors- With employees
- With business partners or shareholders
- While traveling for business (lodging and mileage remain 100% deductible)
- While at a business-related convention seminar
- For a business meeting at an offsite location
- Food in the office like coffee, doughnuts, water, a cafeteria, etc
To make sure your write-offs are accepted, make sure you have this checklist of items with your tax documents.
- Amount of each expense
- Description of each expense
- Date
- Location
- Business purpose
- Name of the person/people with you, and their business relationship to you
If you can get a receipt after each meal, the first part of this list are already there for you. Write the rest on the back, then scan the receipt into your computer and you’re ready to go!
With the new tax laws completely removing the ability to write off entertainment expenses, more business owners will be wining and dining clients at restaurants. But be careful – an expensive restaurant with live music could be flagged and considered entertainment in an audit.
There are other types of meals/food expenses that will let you take up to 100% deduction(!)
100% deductible meals include:
- Social events like the business holiday party (only for employees, NOT customers)
- Food provided at the office for more than half the employees to have people working late or on weekends, for the convenience of the employer
- Food at an open house for selling a property
- Other 100% deductions:
- Promotional/marketing events
- Employee team building recreational activities
As always, it’s best to record these things as they happen, on a weekly basis ideally to keep your records as organized as possible. A good system is to have a category for the 50% deductible meals and one for the 100% deductible right in your accounting program, like Quickbooks.
Have some more business meetings, save yourself more taxes, further the growth of your business along, and have fun with it!
If you’d like help with your tax return prep, financial statements, or payroll processing, our professionals at D&M Accounting are ready to be part of your team.
We also offer training on accounting software as well as small business consulting services for those who would like a little extra know-how with some of the fine details that go along with managing the finances of your company.
