× Back rOS®
Partners Partner Portal Become a Partner Integrations Business Types Full Service rOS System Quick Service rOS System Pizza rOS System Franchise rOS System Bubble Tea rOS System Cigar Lounge rOS System Company About LINGA Contact Us Downloads News Reviews Media Queries Careers Pricing Store Support LINGA Blog

Main Line:

Support:

What Restaurant Owners Need to Know about the New Tax Law

Please correct the marked field(s) below.
New Tax Law affects Restaurant Owners

The new tax bill that finally passed in December provides a number of extensions for various existing tax breaks for restaurant & bar owners. Here are some of the most important points you need to know about the impacts the tax bill will have on your bottom line when it comes time to file.

Write-Offs for Expansion

Proprietors of restaurants and franchise owners who either open a new establishment or upgrade existing equipment will be given a full and immediate write off option on their new investment. This part of the bill was specifically aimed at boosting employment and stimulate the economy by allowing restaurants to grow with far less of a burden to shoulder. Write-offs made on expansions under this provision must be filed before the start of the filing period in 2023.

Inheritance Tax Revisions

Family restaurants that are passed down to children will still be taxed at a rate of 40%. But this will only apply to businesses evaluated at over $11.2 million. That is double the current threshold, releasing many more small and medium-size businesses from the burden of having to pay for the right to pass wealth on to their children. Exemption values for married couples have been raised to $22.5 million. These elevated thresholds expire in 2025.

Pass-Through Companies

Most restaurants are what is known as pass-through concerns- meaning they are used to reduce the pain of double taxation. The bill makes the first 20% of dispersed income exempt up to $175,000 for individual filers and $315,000 for couples. The deduction cap replaces a measure that determined the upper limit on the amount of money pass-through companies paid in salaries. This was meant to curtail high-value professional service relationships from taking advantage of measures that were designed to help small businesses- like restaurants. But it was determined that the language of the stipulation would have created a loophole that would have had the opposite effect.

Leniency for Corporations

The corporate tax rate has been lowered from 35% to 21%. The initial version of this provision would have lowered them to 20%. Current regulations make it possible to pay an effective 20% rate by applying deductions. Certain provisions enable some types of companies to pay less under specific conditions.

Rewards for Repatriating Business Processes

In an effort to incentivize companies bringing business back to the U.S, the bill offers a one-time 15.5% tax rate on profitable enterprises that are brought home. Anticipation of this aspect of the bill alone has been a major driver behind much of the revitalization of the economy we’ve seen over the past 13 months.

The Bottom line

These provisions are just a sample of the relief that individuals and companies can expect to enjoy under the new law and is the first major tax revision bill since the 1980s. These cuts are beneficial for all businesses and are intended to spark new economic growth. As 2018 dawns, we will see whether restaurant and bar owners intend to reinvest these tax breaks into their businesses, creating growth- or simply pad their own pockets.

For more information on tax laws for restaurants, forms, and avoiding problems with restaurant taxes, the IRS provides a Restaurants Tax Center.

Linga POS and Benseron Hospitality does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.


Get hot restaurant tips. Delivered.

Please correct the marked field(s) below.

Check out some of our latest Blogs.

9 Minutes

Restaurants Need More Technology Than Ever

2020 was a challenging year for restaurants like many businesses. It gave restaurateurs all more insight into customer needs, expectations, and future restaurant technologies to keep up with the competition and draw in more revenue. 2021 is a new chapter with new opportunities if businesses embrace these new technolog […]

Read More

7 Minutes

Kitchen Display Systems Can Transform Your Restaurant Business

7 Reasons Why You Should Implement the LINGA KDS in Your Restaurant Right Now! If you’re dreaming of running a franchise empire, implementing the right technology can help you grow your restaurant business into multiple locations. But when we talk about restaurant technology, we often think of the front-of-house […]

Read More

7 Minutes

Eliminate Credit Card Processing Fees with LINGA Cash Discounting Program

If you are sick and tired of the rising costs of accepting credit cards and want to keep more of your revenue without raising prices, the right solution is ready: LINGA Cash Discounting Program! In the restaurant industry, every dollar counts. Knowing how to circumvent the cost of credit card processing fees (often […]

Read More

This website uses cookies to improve your experience.

More information.