11 Tax Breaks for Thrift Stores

TP Blog Thrift Tax Breaks

4 minutes Operating a thrift store comes with the same responsibilities as any other retailer. You have to hire employees, source and manage inventory, market your business, and pay the bills that keep the store up and running. Seasoned shop owners know this all too well; you may have even mastered the art of gaining customers to your thrift store. But there’s one opportunity that’s often overlooked: saving as much as possible on taxes. “A regular retailer and for-profit resale store have the same tax deductions,” says Patricia T. Anderson, an accountant and Enrolled Agent based in Boca Raton, Florida. However, in many cases, neither type of business owner takes full advantage of the tax breaks available to them. A recent QuickBooks survey found that 8% of small businesses don’t deduct any expenses on their tax forms. Meanwhile, another 36% said they “could make better use of tax deductions.” While hiring a certified professional accountant can help clear up a lot of the confusion, you aren’t off the hook completely. As a thrift store owner, it pays to know which tax deductions you’re allowed to take each year. After all, the more expenses you write off, the lower your taxable income. To get you started, here are several tax breaks available for thrift stores. Once you’re informed, you’ll be better prepared for the 2020 tax season – and you’ll be a better business owner because of it. Note that these tax breaks are explained in further detail at IRS.gov. If you have any questions, you can refer to Publication 535 or consult your accountant. 1. Business License/Permit To own and operate a thrift store, you may be required to acquire several things, including: Seller’s permit Business license Federal employer identification number (EIN) Any local business permits as required by the county clerk It can be a headache to obtain all the appropriate documentation. Fortunately, the fees you incur with licenses and permits are eligible tax deductions. The IRS says, “Some licenses and fees may have to be amortized.” Consult with your accountant to confirm exactly how to deduct these expenses. 2. Employee Wages Under certain conditions, you can deduct wages as an expense each tax year. To be clear, wages include hourly rates, salaries and any commissions you might give your top performers. If you hand out holiday bonuses, you can add those to the total deductions, as well. 3. Workers’ Compensation Insurance Speaking of employees, are you required to carry workers’ compensation insurance to cover any accidents they may have? If you are, the premiums you pay for workers’ compensation are eligible tax deductions. 4. Promotional Materials Advertising and marketing are key ways thrift stores make money. For instance, you might hire a graphic designer to create a distinctive logo or buy an ad in a local newspaper. However you choose to market your thrift store, it will probably come at a price. The good news is you can write off these advertising expenses. The IRS says, “You generally can deduct reasonable advertising expenses that are directly related to your business activities.” 5. Automotive Expenses As a thrift store owner, you likely put a lot of miles on your vehicle, driving to various flea markets, antique stores and auctions. Use these expenses to lower your taxable income. You can do this by tracking mileage and using the standard mileage rate (58 cents per mile for the 2019 tax year). Or, those who use their car or truck exclusively for work can, instead, deduct total vehicle expenses accrued throughout the year. This includes lease payments, gas, oil changes, new tires, repairs, tune-ups, insurance and registration. 6. Travel Expenses Are you itching to check out the antique mall three states away? Go for it! You can deduct travel expenses related to your thrift store business. This includes airfare, lodging, local transportation and even meals. “[You] could even deduct a large SUV or truck rental to pick up items,” adds Anderson. Meals for you and/or any employee who travels with you are 50% deductible. “If you are eating with a business associate or customer and business is being discussed, you can deduct meals,” according to Anderson. So, hold onto those receipts – they’re worth more than you realize. 7. Office Supplies You can write off a lot of your everyday office supplies. Printer paper, ink cartridges, pens, paperclips, receipt paper and the like are all eligible business expenses. You can even count software subscriptions you use to run the business, such as your POS system, accounting software and employee-scheduling program. 8. Rent and Utilities Running a brick-and-mortar store is not much different than owning a home. Even if you rent the storefront, tenants are responsible for certain utilities. Paying for heating and air conditioning may fall to you, as well as sewage and water expenses. You’ll also need internet services to hook up your payment processor and a telephone to take customer calls. Lucky for you, all these expenses are deductible, including the monthly rent check you write to the landlord. The only caveat is these expenses cannot overlap with personal use. That may mean you have to buy a separate cellphone and cellphone plan to prevent any gray areas. 9. Start-up Costs Brand new businesses get a special tax break – and for good reason. It’s too early to make much profit, yet you still have bills to pay and mouths to feed. That’s why the IRS lets you deduct up to $5,000 in start-up costs and $5,000 in organizational costs. 10. Credit Card Fees Although some resale stores run on a cash-only basis, it’s not necessarily the best option. In fact, one of the ways thrift stores can stay competitive is by offering multiple forms of payment. However, when you start accepting credit cards, you also start accepting the fees that come with them. Because these credit card convenience fees can quickly add up, be sure you deduct them as a business expense. 11. Cost of Goods Sold Retailers that buy and […]

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How To Gain Customers To Your Thrift Store

TP Blog Thrift 1 1

4 minutes Opening a resale shop or thrift store is a romantic dream for many. Selling vintage clothes or recycling antiques from yesteryear can be great fun! But a resale shop is also a business. That means you need to bring new customers through the door every day if you want the venture to thrive and survive. To reach new shoppers, you’ll need to use all the traditional methods of marketing and advertising that any other retail business would employ. From printing fliers to creating newspaper, radio and television ads to engaging online with potential customers. However, customer service is paramount in the resale industry, says Adele Meyer, executive director of NARTS: The Association of Resale Professionals. “Customer service is key,” she says. “They won’t get current customers to return or to refer new customers to them if they don’t have a very high level of personalized customer service.”   The Power Of Great Customer Service In fact, treating your customers right is the best way to drive your bottom line higher, according to Meyer. “Word-of-mouth referrals are probably more relevant in the resale industry than in other forms of retail,” she says. That means resale shops and thrift stores need to go above and beyond to meet their customers’ needs — everything from helping shoppers find the right items to suggesting add-on items that will complete an apparel outfit or a furniture setting. “Our member stores focus on customer service that isn’t found in the big-box stores,” Meyer says. “Because of the high level of customer service, many customers refer a shop to their circle of family and friends.”   More Ways To Bring In New Customers Great customer service will keep customers coming back, and word of mouth will bring in new shoppers. But don’t stop there. There are many other ways to attract new customers to your resale shop. They include:   Host events. Some shops allow customers to host evening events and gatherings at the store. The store owner can add sweeteners to the experience, such as offering refreshments or a fashion show as part of the event, Meyer says. Or, perhaps you could plan your own evening event – such as a short class on an area of interest pertinent to the merchandise category, Meyer says. Examples she suggest include lessons on: Scarf tying Packing for travel Furniture painting Every time you host an event, you open an opportunity for more future business. “Evening events bring in new customers, some who may have never been exposed to resale,” Meyer says.   Advertise your inventory online. Meyer says many of her organization’s member shops put a lot — or all — of their inventory for sale online. “This makes it easy for someone who sees an item they think a friend or relative may love to forward a link,” she says.   Offer items that appeal to the right demographic. The neighborhood in which your thrift store is located should drive the types of items you list for sale. Is your business in a place where families live or congregate? Offer kids toys and clothes. Do you live in an area with a lot of rental housing? Sell furniture that renters need when moving in. “This isn’t an industry like convenience stores, who basically all carry the same type of products,” Meyer says. “This industry is much more specialized, and therefore each shop has to determine its own target market.”     Make technology your friend. Too many resale shops fail to take advantage of modern methods of reaching shoppers, such as email, social media and ecommerce, Meyer says. She urges shop owners to keep up with current technology trends, and to be proactive and creative with social media and other modern methods of marketing. For example, collect your customers’ email addresses, and send them notices of upcoming sales, or even simply birthday greetings. Keep your thrift store inventory and your customer contact information organized with Talus Pay. To learn more about how Talus Pay’s POS can benefit your resale shop, get a free quote today.   […]

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