Optimizing Retail Staff Perks for Tax Season"
By Joshua Scott Hotchkin
I can remember the moment that I first got hired in a head shop. I was 21 years old, and I felt like I had been chosen for a sacred calling. For me and my friends, selling incense and water pipes was living the dream, a source of both identity and pride. It was a privilege and honor which paid about 10% over minimum wage. Besides the recognition and modest pay, there were additional perks. I was fortunate to work in shops where the owners offered benefits to us that also yielded tax deductions for them.
Sadly, many of those deductible benefits have been kerplunked by shady legislators who would rather provide tax breaks and bailouts for major banks and large corporations than small businesses and their working-class employees. However, there are still a few loopholes at your disposal to slide some extras to the folks who keep your business up and running. A boost in morale is a boost in productivity; the more appreciated your employees feel, the more effective they’ll be at their job—which can only boost your bottom line. Here’s a quick list of ways you can make your people feel the love, while possibly saving a buck or two, come April 15th.
Meals & Snacks
It used to be that meals and snacks bought for employees working on the premises were 100% tax deductible, but unfortunately, this is no longer the case. Starting in 2018, the laws were amended to provide a 50% deduction on snacks, beverages and meals provided to employees in store, under the condition that they are provided for at least half of your employees present at the time of purchase—or for those working overtime. Although not as helpful as these breaks used to be, they are still something, and fully worth utilizing. At the very least, providing things like coffee, pastries, and other refreshments is a great way to boost morale while scoring some tax deductions, however small they may be.
There are a few situations in which food and drink are still 100% deductible for retail employers. Office parties and outings held for the benefit of your employees allow you to write off food and beverage purchases completely. You can apply these fairly liberally if you have weekly office parties and celebrations for holidays. It doesn’t just stop with food and beverages. You can also foot the bill for entertainment, provided your employees agree to report those benefits as taxable income in addition to their hourly wage or salary.
Purchasing informational materials related to your business is another way to claim tax deductions. For our world, that could mean employee subscriptions to MJBiz, Marijuana Venture, or even High Times.
You can also use this to build a small library of books and magazines which inform your employees of the ins and outs of your products and business model, which will inform them of history, current trends, and provide a broader picture of how their place of work operates from top to bottom.
Tools & Uniforms
Items used by your employees to more effectively or efficiently complete their work are tax-deductible. While there are not a lot of tools used in this profession, you might find that things like box cutters or a multi-tool get enough use to justify purchasing them for each employee, which they may see as a benefit since they can take those items home and keep them beyond the terms of their employment.
Uniforms also count here—and a t-shirt with your logo does count as a uniform. But why stop there? Industry-specific apparel like hemp pants or shoes could count as a uniform too. That’s especially a win if you’re already selling those items; suddenly, your employees are doubling as models for the products. You can also write off the cleaning of these items if you are inclined to do so.
Bike To Work
If your employees ride a bicycle to work, you can pay them for their travel time, which can then count as tax deductible wages. It may not sound attractive to pay
your employees for the time they take to get to work, but there is an additional benefit for you: You get to tell your community that you’re doing what you can take care of both your employees and the environment—which is a fantastic way to step up your local PR game.
Student Loan Payments
If you cover an employee’s student loan payments, they are tax deductible for you, but non-taxable for the employee. With that in mind, keep an eye out for employees already making such payments. You both may be able to benefit from a new arrangement.
Deductions are available for education assistance programs, which can benefit you, as well as employees such as accountants or managers who need ongoing education.
Things like certificates and trophies purchased to reward top-performing employees are tax deductible. This may seem absurd on the surface, but if you are creative, you can find fun ways to honor employee achievements while building a thriving workplace culture. Consider tongue-in-cheek awards that have a sense of humor and keep your employees amused and productively competitive.
Employee merchandise discounts are tax deductible, and given that your employees likely enjoy your products, this is sort of a big deal. If you sell clothing and food items, then your employees can make many of their normal purchases from you, which makes things cheaper for them, and provides you not only with extra income but also with more deductions. Employee discounts are a win for everyone.
Keep in mind that I am not a CPA. My credentials here are limited to experience in bookkeeping with a few certifications. I did, however, consult a tax expert, as well as multiple sources, while researching this article. Moreover, these laws change regularly, so by the time this is published, some
of this information could already be obsolete. Set up a meeting to talk to your accountant about which of these tax-deductible employee benefits may apply to you, and find out if there are others I may have missed. Happy employees lead to happy customers, and that combination is invaluable to you as a small business owner.
Editor’s Note: This is article is for information and entertainment purposes only and should not be construed as legal, financial, or tax advice. Please consult a certified tax professional before considering any information in this article as factual.