As a small business, your restaurant is fueling our economy. It also means, as a small business, you have to know about tax planning. No one really likes to talk about it, but tax planning is important for restaurants. Watch the video below, or keep reading, for more information about tax planning.
The last thing you want as a small business owner is getting to the end of the year and getting hit with a huge tax bill. If you don't know your numbers - like a lot of restaurant owners - you're vulnerable to big financial mistakes that could cost you your restaurant. Taxes are no exception.
How can you plan for your taxes?
First, you have to have an annual budget. If you have a budget for what you think you're going to do in sales, what your cost of goods sold is, your labor cost and each line item in your restaurant, then you can see where your profit and loss is month after month. Then if you really look at it, and you're measuring it, then you can make adjustments when sales are lower or higher, or there are extra costs that were unexpected, etc. But you're also looking at your taxes.
Second, you should be meeting with your accountant or CPA quarterly. If you have a good CPA, you're not waiting until the end of the year, showing up with a shoe box of receipts and getting charged at the height of the tax season to recreate your financials. With a good CPA, you're meeting quarterly to plan for taxes. Most CPAs tell me, if you're doing it right, your restaurant probably won't pay any taxes. But you do have a personal income that is impacted by your business or other entities. Your CPA needs to know where you are in income and revenue to make sure you're preparing for the right tax bracket. You can't make smart financial decisions or know when to reinvest in your business if you don't meet with your CPA.
If you want to take your business to the next level, and make sure you're using your money right, make sure you're tax planning.
If you would like to learn more about the importance of systems and how to run a restaurant, read our free special report, Is Your Food Distributor Screwing You? 5 Things You Can Do Now to Lower Food Cost. Download it here. Be sure to visit my YouTube channel for more helpful restaurant management video tips.
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