Kkeping Track of Tax Deductions: Food

[kam]

Hello all,

I had my first show yesterday. I bought the food (as a thank you for having the show as i start up). I made the ham & cheese brunch squares and mini cinnamon rolls. I only bought the ingredients needed for that show on the register recipt - and I couldn't believe it came to $22!

I made the brunch squares using both ham & sausage (which if I only used one, it would keep the cost down). Since I only needed partial of the ham package and sausage package do I still put the entire amount for tax purposes? If I had another show soon, I would obviously use these partial packages, but since I don't, do I still get to "write-off" the entire amount? It's not like I could buy half the sausage roll.

Also, do I need to keep food purchased for a show separate? (separate from other shows and separate from trial recipe food?)

Thanks!
Kathleen

 

[chef_kimmo]

I am interested to hear others opinions of writing off the whole amount.

As far as keeping the receipts separate, you don't have to. I usually write on the receipt what it was used for but ultimately they will go in the same spot on the tax return.

Also, I do not think you need to keep the food separate. If you buy a block of cheese and use it for a show or two and trial recipes, then you are more legitmately writing it off. Again write on the receipt what you have used it for. Just like if you take someone to lunch to talk about the business, you would write their name on the receipt.

 

[chefann]

It depends on how finicky you want to be. My Director keeps all her food receipts, and just writes off 1/4 of the total at the end of the year, based on the assumption that about that percentage is spent on show food and practicing PC recipes on her family (aka Dinner ).

 

[chef_kimmo]

It depends on how finicky you want to be. My Director keeps all her food receipts, and just writes off 1/4 of the total at the end of the year, based on the assumption that about that percentage is spent on show food and practicing PC recipes on her family (aka Dinner ).

Hmmm, that is a good idea and since I enter everything in Quicken, I could just do the percentage rather than digging through receipts which are hard to read and hunt out ingredients.

 

[kam]

As far as keeping the receipts separate, you don't have to. I usually write on the receipt what it was used for but ultimately they will go in the same spot on the tax return.

I have been just keeping the receipts separate and if I have personal items on it too, I am just circling the Pampered Chef related items. I did not realize I had to go into detail on each receipt. How much detail? If I am using it for testing, do I have to say which recipe?

Does anyone know if copies of receipts are OK, or does it have to be originals. I notice that when I highlight on the originals, the "ink" from the receipt wears off. I also notice that the receipts will fade over time.

 

[dwyerkim]

I am interested read people's responses to this as I have been "struggling" with my accounting system (basically by struggling I mean I'm just not doing it!). Right now I've been keeping food bought for shows separate, as much as possible. I will right the host name on the receipt if I am particularly organized at the store. Some things I have a receipt with all PC stuff but not by "show"--for instance, when brownie mix and rolos were on sale I bought 10 boxes of mix and 35 rolls of rolos. Wonder what is on the menu for my shows? I do get reimbursed for ingredients by hosts so I guess technically I shouldn't be writing that stuff off unless it averages more than $15 a show, right? For all my other grocery receipts, I've been keeping them but haven't known what to do with them... I like the idea of writing off a percentage, then I don't have to go through and circle fresh ingredients (vs. cleaning supplies, paper products, etc) and name recipes.

 

[KellyTheChef]

I would check with your accountant...writing off 1/4 of your food bill seems rather high to me. How would you proove that if you were audited?

I save my receipts, but don't seperate PC from my own bills. I just circle what belongs to PC. I usually attach a small note indicating what each item is for. (As in brownie mix for testing a the warm nutty brownies, or brownie mix for a demo of that recipe...) I noticed the same thing about using a highlighter- it will really make the ink fade quickly so I just circle it with an ink pen instead.

As an answer about the partial roll of sausage, etc. I would write the entire thing off...you purchased it in the smallest package and you would NOT have needed to buy it if you weren't doing that recipe...to me, that means it was an expense. If possible, use it at your next show...but if that's not possible then use it for your family!

 

[KellyTheChef]

Also, do I need to keep food purchased for a show separate? (separate from other shows and separate from trial recipe food?)
no...too much hassle!!

 

[chef_kimmo]

I agree, I don't separate out each show.

I just write on the top or back of the receipt the name of the recipe. I don't worry what is for what recipe. It is my way to jog my memory if I am audited.

We don't go through and separate out what shows we use each file folder for or each envelope purchased. (ok, I don't anyway)

 

[traci4tpc]

You can put an expense to a particular show in P3. If you bought groceries for show #? put the amount in for that show and put in what it was for, i.e. Warm nutty brownies. This way P3 deducts your expenses for you on that particular show and at the end of the year you have everything in one place. When I have a receipt I automatically put it in P3 and keep everything in a manilla folder for when I need to do my taxes; everything should be accounted for. I then double check to see if everything was put in either P3 or my accounting program. It's been working for me!

 

[pcmissyfee]

I keep mine as separate as possible, but also keep track of it in PPP.

 

[FromMaria'sKitchen]

Kam,

Copies would be fine - maybe even better because the receipts do fade over time and especially if they get something spilled on them or get warm (they're usually thermal paper not paper and ink.) You don't HAVE to put the host's name and/or recipe on them, but trust me - it's easier to scribble it on there when you get home from the store rather than trying to reconstruct it later. If you do stock up when ingredients are on sale, I would just note that on the receipt. When you file your taxes, you're just going to add everything up anyway and if you ended up writing off an extra box of brownie mix, I doubt the IRS will be too worried about it.

 

[kam]

Thank you everyone for clarifying a few things.

I did not want to get too far along and not have it done "right".

In Excel, I am listing on one worksheet each "test" recipe name and the ingredients needed. Once I bought an ingredient and "expensed" it, I would put an "X" in the next column. This way, if I happen to use an ingredient "on-hand" and don't have a receipt, I do not place an "X". Then when I get the ingredient on a receipt, I then mark it as "expensed". I was thinking this would be a good way to tally up butter, eggs, flour etc. Once I see enough un-marked eggs, I would buy a dozen and mark off enough recipes with eggs. Make sense? Or way too much? This also helps me make sure I am not expensing test recipes more than twice. (I wish I could expense the Asian Pork Skillet every week).

Would this list be enough to keep track of what items were used for, or should I still be marking everything on the receipts?

 

[hperschnick]

I purchase the ingredients for my hosts but at the store I separate out my PC ingredients from my family items and pay for them separately. Then on the receipt I write either the recipe name or the host name. I enter that amount in P3 (or plan to... I'm a little behind). I then collect $15 from my host. My demos have been more than 15 in the past so I'm working on revamping my recipes to be a little cheaper! I usually do 2 - a sweet and savory. I also do the entire amount even if I only use a part of the package. I try to keep it as simple as possible - I hate this part of the biz so if I make it too difficult... I'll end up not doing it!