What counts as an expense and what does not

Almost every conversation about tax in a small restaurant is really a conversation about expenses: what counts, what does not, and what you can prove. The rules about which category a thing falls into are your jurisdiction's; the discipline that makes any of them usable is entirely yours, and it is mostly about paperwork rather than about tax.

🧠 The logic underneath

Underneath the local variation there is a shared idea, and knowing it lets you predict roughly where a question is going to land even before you ask it. Broadly, a cost is deductible when it is incurred for the business, ordinary for a business like yours, and documented.

Each of those three does work:

• For the business. The test that catches everything personal, and the one that makes mixed items complicated rather than forbidden.
• Ordinary. A commercial oven is unremarkable in a restaurant. Something far outside what a restaurant normally buys invites the question of what it was for, and the answer needs to exist.
• Documented. The one that is entirely within your control and the one that actually loses people money. An entitlement you cannot evidence is not an entitlement in any way that matters.

Notice which of the three this course can help with. The first two are judgement applied to local rules and belong to your accountant. The third is a filing habit, and it is worth more than any clever question you could ask them.

🌫 The four grey areas every restaurant has

These four come up in every small restaurant, everywhere, and each has a local answer that this course will not guess at. What is universal is that they are grey — meaning there is usually a right way to handle them, and it involves keeping a record rather than hoping nobody asks.

• The vehicle. Used for the business and also to take the children to school. Almost everywhere the answer depends on splitting it, and splitting it depends on having recorded the business use as it happened. Reconstructing a year of journeys in April is nobody's idea of a good time and convinces nobody.
• The house. If real administrative work happens there, there is often a way to recognise that. It has conditions, they are specific, and they are worth asking about rather than assuming in either direction.
• Staff meals. Food that came in as stock and left as a meal for the team. It is a real cost and it is normal; how it is treated — and whether it has consequences for payroll — varies, and it is the item most often handled by simply not thinking about it.
• Anything paid in cash. Not the payment method's fault: the problem is that cash tends to arrive without paperwork, and a cost without paperwork is a cost you cannot use. If you pay cash, get the invoice at the moment of paying, because it does not become easier later.

What these four share is that none of them are settled by cleverness. They are settled by a record made at the time, and then a question asked once about how your jurisdiction wants them treated.

📄 In the business's name, and separate

Two habits do more for this than everything else combined, and neither requires understanding a single tax rule.

Get the invoice in the business's name. Not a till receipt with no name on it, not an invoice to you personally. This takes ten seconds at the counter and is impossible to fix six months later, and it is the difference between a cost that exists and one that merely happened.

Keep the money separate. A business account for business things and a personal account for personal things, with owner's money moving between them in identifiable, deliberate transfers rather than as a blur. Mixed accounts do not just make bookkeeping slow — they make it impossible to demonstrate the first of the three tests above, because everything looks like it might be personal.

If you do only those two things, most of this topic takes care of itself. And they are also what makes the record-keeping table below worth filling in, rather than a form for its own sake.

📋 Your own list, which is the only one that counts

Here is the template promised in topic 1. The middle column is deliberately empty: it is what your accountant tells you once, and then you have something better than any list this course could print, because it is about the place you actually operate.

Fill it in once, write the date you asked, and put it in the compliance course's folder. Then revisit it when something changes — a new legal form, a second site, a different way of paying yourself — because that is when a list like this quietly stops being true.