A Taste of Taxes: Tax Deductions for Personal Chefs

Whether you prepare pizza or any other tasty cuisine, there are several tax deductions for personal chefs that can reduce your IRS tax bill.

Whether you prepare pizza or any other tasty cuisine, there are several tax deductions for personal chefs that can reduce your IRS tax bill.

Do you love cooking up spicy Mexican cuisine for your clients? Is tangy Italian food more of your bread-and-butter, so to speak? Are you a master at preparing delectable sushi or Thai food? Or can you make the most incredible cheeseburger in your town?

Today is Personal Chefs Day! We recognize all of the self-employed personal chefs out there who love spending time in the kitchen in front of the stove. Their satisfaction ultimately comes from putting smiles on their clients’ faces as they enjoy their culinary creations.

If you work as a chef with your own small business, here are some notable IRS tax deductions for personal chefs to help you keep more of your hard-earned income:

  • Food costs: Raw ingredients, pre-packaged food, canned foods, oil, sugar, salt, pepper, spices, condiments, etc.
  • Beverages: Special drinks you prepare and the liquids and ingredients you use to make them
  • Kitchen appliances: Pots, pans, ovens, microwaves, toasters, blenders, dishwashers, etc.
  • Serving items: Plates, bowls, cups, utensils, paper products, platters, trays, and other items you use to serve the food you prepare for your clients
  • Cleaning supplies: Soap, dishwashing detergent, Drano, sponges, dish towels, paper towels, etc.
  • Property rental fees: Kitchen space, restaurant space, etc.
  • Maintenance expenses: Property upkeep, utilities, a cleaning service, structural repairs
  • Vehicle costs: Expenses you incur when delivering your food to clients (either mileage or actual expenses)
  • Professional fees: Accountants/CPAs, lawyers, merchant processors, and other professionals or business service providers
  • Insurance: Property, liability, health, etc.
  • Marketing expenses: Business cards, flyers, menus of what you can prepare, signage, a website, social media marketing

To learn about other tax deductions for personal chefs and IRS tax breaks available to members of all professions, turn to 1-800Accountant today. Call us at 1-800-222-6868 or visit www.1800accountant.com to discover how our small business accounting services can help you keep more of your hard-earned income in your business bank account.

Image credit: The image of the chef included in this blog post is used with permission via the Creative Commons license through Flickr.

National Inventors Day – 6 Handy Tips for Inventors

Thomas Edison's lightbulb is just one of countless inventions that have changed the world.

Thomas Edison’s lightbulb is just one of countless inventions that have changed the world.

Are you one of the many geniuses out there with the next million-dollar invention idea? Or have you already created a prototype of a new product? Self-employed inventors are the backbone behind new creations – and improvements to old ones.

In honor of National Inventors Day, 1-800Accountant offers the following tips for inventors:

1. Create a record of invention.

The first step to inventing is to formally document what your creation is. This is done by creating a record of invention. It should contain:

  • A clear and concise description of your invention idea
  • The date of when you start this record
  • Your signature
  • Signatures of two trustworthy witnesses who are familiar with your idea, and the dates they signed the record of invention

2. Be very hesitant about revealing your idea to others.

The last thing inventors want is to have their ideas stolen. Therefore, it’s important to be as discrete as you can about what you’re up to in the basement. Someone could potentially take your idea right off your plate and file for a trademark or patent before you ever have the chance to do so yourself. So only tell close family members and confidantes whom you know would never say anything about the specifics of your idea. If you have to reveal any information, keep it very generic.

3. Design a prototype of the product.

There are two basic ways to develop a tangible prototype for the item you have in mind. One option is to create it yourself. Perhaps you have all of the supplies you need already, or maybe you can go to a local store or order certain parts and materials online. This option is often quite daunting but works well for certain inventors. The other option is to seek out a manufacturer to develop the prototype on your behalf. You’d obviously have to give them the specifics in terms of precise measurements, design details, and other specifications. Once one prototype is designed, it’s generally fairly ease to create more than one. Showing a prototype to others is an extremely effective way of demonstrating your product visually. Perhaps there’s a small business investor out there who might find it very useful and would decide to help you mass-produce your invention.

4. File for a patent, trademark, or other legal protection.

To protect your creation, file for a patent, trademark, or other type of formal legal protection. This process can take some time. But as long as you start the paperwork for this process, you should be in good shape in terms of protecting your idea from other inventors.

5. Consider adopting a formal legal business entity for your work.

Even if you’re the inventor of one item, it can be beneficial to adopt a formal entity for your work, such as an LLC, an S corporation, or a C corporation. Many self-employed inventors work as either sole proprietors or as members of business partnerships. In these cases, their work is less protected, and they’re often on the hook for higher tax rates from the IRS.

6. Claim all relevant tax deductions for inventors.

Despite hefty income taxes and self-employment taxes levied on inventors by the IRS, there is some positive news. You can save on your taxes by claiming relevant tax deductions for inventors to help reduce the bill you get from Uncle Sam each year. The research and development deduction is one of the primary deductions for inventors. In essence, you can claim R&D costs you incur to both research the type of product you are creating, along with the expenses you face to physically develop and create it. These costs may be those incurred for the manufacturing process. Of course, other business tax deductions include the home office deduction, the vehicle deduction, and writing off startup costs.

Get more business and tax tips for inventors at 1-800Accountant. Call 1-800-222-6868 or click over to www.1800accountant.com.

5 Things You Must Include in Your Small Business Budget

1-800Accountant offers up the 5 things every entrepreneur should include in a small business budget.

1-800Accountant offers up the 5 things every entrepreneur should include in a small business budget.

To build the foundation for a small business with a good chance of experiencing future financial prosperity, it is critical to develop an effective and appropriate budget for it.

These 5 items are absolute musts to include in your small business budget:

1) Costs related to your business infrastructure

The overall infrastructure of a business revolves around where it is housed and the entire operations of how it runs. This could refer to a home-based business you run out of a back bedroom. Or, you might be doing business in a retail shop in the downtown section of your local city. You could also own or rent out office space to help separate your personal and business activities. The good news with a home office is that you can minimize your overhead expenses by not having to move into a high-rent location. The home office deduction is in the mix for this, too. However, it’s often well worth it to be seen from the road. In many instances, small businesses start out in someone’s home and eventually expand into a larger location. Just be sure to take these possibilities into consideration when crafting your small business budget.

2) Expenses for equipment, supplies, materials, etc.

The tangible pieces of equipment and items you use to run your business, along with intangible services, should represent an integral part of your financial plan. You certainly want to have the latest and greatest goods or services to operate your enterprise with, but at the same time, you don’t want to break the bank buying them. So strike the right balance here. Common expenses in this part of a budget include computers, printers, tablets, fax machines, desks, cloud-based services, and even manufacturing costs if you produce and sell goods. It’s wise to shop around for all of these business necessities, and don’t hesitate to negotiate under the right circumstances.

3) Marketing expenses

Starting a business requires at least some marketing. And good marketing is rarely ever free. You might choose to buy ads on Facebook, Twitter, or LinkedIn for your small business. You might even turn to more traditional forms of marketing like newspaper/magazine ads, TV commercials, or radio spots. No matter how you choose to promote your offerings, make reasonable calculations on what your marketing expenses will be. Only spend a good amount of money on methods you know will work, and test out others by spending a little here and there to see the results.

4) Payroll costs

Payroll is important for any small business, even if you work completely independently as a one-man band. Your employees or contractors must be compensated fairly for the hard work they perform for you, and you as a small business owner must reap some financial benefit from your own duties as well. Account for any health insurance, paid vacation, or other perks you plan to offer those who work for you.

5) Projections on expected revenues

Most of us rightfully view a budget as a guide to how much money we can afford to spend and what we need to spend it on. But accounting for the money you expect to earn in the future should be included in your small business budget. You obviously need a decent cash flow to pay for initial and ongoing expenses. Unless you have tons of startup capital in your bank account, the only way to cover your costs is to have an adequate stream of income being generated by your company. Calculate level-headed projections on the amount of revenue you anticipate on making in 3 months, 6 months, a year, or even 3-5 years down the road. Don’t forget to estimate the prices of your offerings, which are certainly needed for inclusion in a small business budget.

Learn more about crafting the best small business budget for your entrepreneurial endeavor by teaming up with the accounting and financial experts at 1-800Accountant. To learn more today, call 1-800-222-6868 or check out www.1800accountant.com.

Image credit: The image included in this blog post is used with permission via the Creative Commons license through Flickr.