Food trucks have proven to be a booming industry, not only in the Minneapolis-St. Paul area, but also across the country. If you’re thinking about opening a food truck business or have begun one already, it’s important to know that food truck tax deductions can be extremely helpful. By being familiar with what to deduct and some other important tax-related issues, you can run your food truck business in the most financially efficient way possible. Here’s what to know:
How Your Business Is Set Up
Most food truck businesses are set up as sole proprietorships, partnerships, or LLCs:
- Sole Proprietors – Sole proprietors report all the income their businesses make and must file using Schedule C and Form 1040. In other words, your income will be taxed, but you will also be able to deduct applicable business expenses.
- Partnerships – Partnerships don’t pay taxes on income, but are required to report their operating profits and losses to the IRS using Form 1065. Partnerships may be responsible for employment taxes (Social Security/Medicare – learn more via IRS.gov).
- LLCs – Like partnerships, LLCs do not pay federal income taxes. Rather, they report profits and losses using their personal federal tax returns. LLCs can be treated by the IRS as either a partnership or a sole proprietorship dependent upon the number of members.
Tax Deductions
Dependent on how you have your food truck business set up, you may qualify for a number of worthwhile deductions, including:
- Vehicle expenses – You can take the standard mile deduction here or simply deduct your business expenses. Make sure to keep track of the miles you travel, along with any parking fees.
- Equipment – Like most other businesses, you can deduct business equipment purchases up to a certain limit. To learn about this, visit Section179.org.
- Business Expenses – A number of business expenses can be deducted. These can be related to marketing, supplies, maintenance, advertising, and more.
Remember when it comes to deductions, keep track of everything, including receipts and other proofs of payment. For more information on business deductions contact the experts at Corneliuson & Associates today.