When you own a business that sells or uses perishable goods, spoilage is inevitable, particularly in a grocery or restaurant. Fortunately, keeping records of your food spoilage can help you out come tax season.
What Is Food Spoilage?
Food spoilage is food that goes bad while it is waiting to be served or sold. It can be food that isn’t sold before the expiration date or food that sat around too long in the cooler and rotted. It does not include food that was bad when it arrived.
How Do You Calculate Spoilage?
When calculating food spoilage, keep track of the amount of food you throw away. When it comes time to calculate how much was lost to spoilage, simply multiply the number of items you threw away by the price of each item. Then when it comes time to do your taxes, you can take a food spoilage tax deduction. This deduction reduces the overall amount that you owe on your taxes.
Who Can Use This Deduction?
Anyone with a business with food that they throw out when it expires or when it is too ripe to be eaten can use this deduction. All you have to do is keep track of what you throw out.
Food spoilage does not have to be devastating to a restaurant or grocery. You can recoup some of your losses by claiming a food spoilage deduction on your taxes.