Payroll companies understand running a restaurant is tough — there are a myriad of laws and regulations that dictate how restaurant owners must manage employee wages and tips. Thankfully, the passage of the American Taxpayer Relief Act this month extended several important tax benefits to California restaurateurs, including the 15-year tax depreciation schedule for buildings, extension of the Work Opportunity Tax Credit and an extension of the enhanced deduction for charitable food donation.
“Renewing these through 2013 will, for the short term, ensure some certainty for restaurateurs,” said Liz Garner, Director of Commerce and Entrepreneurship for the National Restaurant Association on the association’s website. The NRA successfully led a coalition for inclusion of the 15- rather than 39-year depreciation schedule for restaurant improvements and new construction.
Ms. Garner added that the measure gives “Congress time to focus on more comprehensive tax reform in 2013” and that “failure to renew the extenders would have meant less operating capital for restaurateurs to reinvest back into their businesses.”
Orange County Payroll Companies Keep Restaurant Establishments Compliant
Staying current with federal tax laws is one way Southern California payroll companies like PAYDAY Workforce Solutions are able to help restaurant owners overcome hurdles in managing their restaurant business effectively. As a member of the California Restaurant Association, PAYDAY Workforce Solutions is highly experienced in providing a complete array of restaurant management services — such as HR forms, policies and procedures, employee time tracking and attendance systems, pay-as-you-go workers’ comp plans, 401(k) benefits administration, and more. Even better, PAYDAY interfaces with restaurant POS (Point-of-Sale) systems, which means owners have the ability to import their payroll data easily and accurately in just seconds.
“We see that California restaurant owners depend heavily on us to manage their payroll needs,” said Brad Campbell, president of PAYDAY Workforce Solutions, headquartered in Orange County. “Regardless of how many employees a restaurant may have, we process restaurant payrolls quickly and accurately, ensuring that every establishment is fully compliant with reporting of standard wages, tip allocations and compliance to FICA, TEFRA and other important tax laws.”
1. Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) provides benefits to restaurant owners who hire individuals of a target group, including qualified U.S. veterans and those receiving Temporary Assistance to Needy Families (TANF). The WOTC program provides a federal income tax credit of up to $2,400 per year against the wages paid to eligible target groups. Keep in mind that WOTC can not be claimed for wages paid to relatives, including stepsons or stepdaughters, father-in-law or mother-in-law, or if the employee resides in the home of the employer.
2. Tax Deduction for Food Inventory
The Katrina Emergency Tax Relief Act of 2005 allowed for an enhanced tax deduction for restaurants that wish to donate wholesome food to approved agencies. This deduction is equal to ½ of the donated food’s appreciated value, so long as the total does not exceed twice the food’s basis cost. The incremental tax deduction is calculated from the donated food’s fair market value and basis food and labor cost. The American Taxpayer Relief Act extended the enhanced tax deduction of Section 170 to all business entities (not just C Corporations) through Dec. 31, 2013.
3. 15-Year Depreciation Schedule for Restaurant Buildings
The Taxpayer Relief Act also extended the 15-year tax depreciation schedule for restaurant buildings. Congress has approved a 15-year schedule multiple times since 2004 but has never made the schedule permanent, according to the National Restaurant Association. Without the extension, restaurateurs would have been forced to use a 39.5-year depreciation schedule, which would have had a significant financial impact.
For example, a restaurant operator who invested $1 million would have seen their tax liability increase by nearly $10,000 without the 15-year building depreciation schedule. Congress also authorized another year of the 50-percent bonus depreciation for certain equipment.
PAYDAY Workforce Solutions for Restaurant Owners
Payroll companies give restaurant owners peace of mind by ensuring reports to the government are accurate and timely. Why spend your valuable time reading new tax laws and trying to understand reporting requirements? Let the experts at PAYDAY Workforce Solutions manage this aspect of your business for you. Click here for our complete line of service offerings. Or, for a detailed analysis of how PAYDAY Workforce Solutions can manage your restaurant payroll systems for you, contact a PAYDAY payroll specialist today.