Posted October 20, 2018 05:14:15If you’re a small business franchisee, you’re probably wondering if you’re being asked to pay the Franchise Cost tax on the food you purchase.
If you don’t know how it works, here’s what you need to know.
If your franchisee has purchased items under $20 per square foot, you pay the tax on that price.
If they have purchased items over $20, they pay the cost of the items.
In some states, they can deduct up to 25% of the price of their food.
The state of Texas has different rules for businesses with more than 20 employees, and the amount you can deduct depends on your state.
Some states do not allow for the deduction.
Others, like New York and California, require a deduction of 25%.
There are many factors to consider when deciding whether you’re allowed to deduct the cost.
If a franchisee buys food at a store, they must pay the full cost.
That includes taxes, packaging, shipping, and handling.
If the cost is over $200, the franchisee may be able to deduct up as much as 50% of it, which is often called the franchise cost.
The other 50% goes to the state and local tax on their purchase.
Depending on your franchise, the cost can be higher or lower depending on the location.
If the cost exceeds $200 per square feet, the state may also deduct up or down from the price.