Bookkeeping guide
Food business tax bookkeeping: categories to review
Home baking, catering, food trucks, meal prep. If you got a 1099 for this work, here are common categories and review questions; your facts and records determine what qualifies.
Worth knowing
These are common expenses people in this line of work may need to review. Anything marked in orange is an edge case worth raising with a preparer rather than assuming.
Ingredients & packaging: cost of goods sold
Ingredients you buy to make the food you sell, and containers or packaging that are an integral part of the product, are generally cost of goods sold rather than supplies; boxes used only for shipping are generally a shipping or selling expense. Household groceries and food you take for your own family aren't business costs, so split mixed receipts. PrivateBooks asks you to confirm there was no beginning or ending inventory and no personal withdrawals before it reports cost of goods sold; if you carry ingredients or finished goods from one year to the next, have a preparer calculate Schedule C Part III.
Part III no year-end stock
Sales tax you collect
Sales-tax rules for prepared food, cottage-food, and market sales vary by state and locality. Sales tax imposed on your customers that you collect and pay over to state or local governments generally isn't your income or your expense. If the tax is imposed on you as the seller, what you collect generally counts in gross receipts and the tax may be a taxes-and-licenses expense; any part a state lets you keep is income. PrivateBooks may suggest Taxes & licenses for a sales-tax payment, so keep your POS sales-tax report and filings and confirm the treatment with your preparer.
state rules vary confirm treatment
Commissary rent vs. your home kitchen
Hourly or monthly rent for a commissary, shared-use, or commercial kitchen you use for the business may generally be a Schedule C rent expense; keep the agreement and proof of each payment. A home kitchen that also cooks family meals generally doesn't meet the home-office exclusive-use test, so don't book household rent, mortgage, or utilities as business expenses. A space used only for the business, or a separate space regularly used to store inventory when your home is the business's only fixed location, can be different; ask your preparer.
actual rent keep the agreement
Permits, inspections & food-safety classes
Health permits, cottage-food registrations, inspection fees, and business licenses you pay to a state or local government for the business may generally be Schedule C taxes and licenses. A liquor license may have to be amortized instead. Food-safety courses from private providers, such as a ServSafe class, are usually tracked as training. Keep each receipt and note which permit, truck, or location it covers.
keep receipts per permit
Payouts arrive net of fees
Square, Toast, ezCater, and delivery apps may deposit your sales after taking out processing fees, commissions, or refunds. Record gross sales and the actual fees from the payout report instead of estimating a percentage. This pack lists card processing under bank & merchant fees and platform commissions under commissions and fees for Schedule C review. A 1099-K reports gross payments and may include sales tax, so reconcile it with your records; cash sales count too.
actual fee from statement
Food trucks, trailers & big equipment
A food truck or trailer, its built-in kitchen, and bigger items like commercial ovens, mixers, or freezers generally have to be depreciated or, if you elect, expensed under Section 179; lower-cost items may fit the de minimis safe harbor election. Decide with your preparer. Confirm which vehicle method fits your truck: claiming Section 179 or special depreciation on it rules out the standard mileage rate. Keep cooking propane and generator fuel separate from road fuel. Driving from home to a regular commissary can be commuting; keep a timely mileage log for deliveries and supply runs.
at tax time big items
Kitchen & event helpers: employee or contractor?
Whether a prep cook, server, or event helper is an employee or an independent contractor depends on the facts, not on what you call them. The general rule: a contractor is someone you can direct only on the result of the work, not on how it is done. Employees are paid through payroll as wages, with withholding and a Form W-2, not as contract labor. If you pay a non-employee $600 or more for services in 2025, you generally must file Form 1099-NEC. Money you take out for yourself isn't wages or contract labor. Confirm each worker's status with your preparer.
W-2 or 1099 confirm status
Common categories PrivateBooks suggests
Pick Food business during guided setup and PrivateBooks shows these categories mapped to Schedule C lines for review — no chart of accounts to invent. The mapping does not establish eligibility, business-use share, or substantiation:
| Category | Schedule C line |
|---|---|
| Ingredients & bulk food | Line 36 — Purchases |
| Containers, boxes & labels you sell with | Line 38 — Materials and supplies |
| Commissary kitchen & market booth rent | Line 20b — Rent/lease (other property) |
| Health permits & business licenses | Line 23 — Taxes and licenses |
| Food-safety & food-handler classes | Line 27b — Other (education & training) |
| Smallwares, utensils & cleaning supplies | Line 22 — Supplies |
| Card processing fees | Line 27b — Other (bank & merchant fees) |
| Hired kitchen & event help (contractors) | Line 11 — Contract labor |
| Kitchen & event staff wages (payroll) | Line 26 — Wages |
| Delivery app & catering platform fees | Line 10 — Commissions and fees |
| Food truck or van fuel & repairs | Line 9 — Car and truck expenses |
| Cooking propane & generator fuel | Line 25 — Utilities |
| Business & product liability insurance | Line 15 — Insurance (other than health) |
Merchants it recognises automatically
On top of the 584 built-in sorting rules, this pack adds rules for Chef'Store, Chefstore, Ezcater, Gordon Food, Restaurant Depot, Roaming Hunger, Servsafe, Sysco, Toast Dep, Us Foods, Webstaurant. A matching description gets a suggested bookkeeping category; anything uncertain goes to Review instead of being guessed at. Spot-check every suggestion: a merchant match is not proof of business use, eligibility, allocation, or substantiation.
Do you even have to file?
Net earnings from self-employment of $400 or more generally require Schedule SE, but other filing rules can apply below $400. Whether you received a 1099, also have W-2 wages, had withholding, or need estimated payments depends on the full return. Review the official Schedule SE instructions or ask a qualified preparer instead of treating this bookkeeping guide as a filing decision.
See an optional cash-reserve illustration →
Educational pointers, not tax advice. Tax rules change and your situation is specific — worth asking about at tax time. The free IRS-sponsored VITA program helps people under its income threshold at no cost.