With the pandemic firmly in the rearview mirror, our restaurant clients have seen a return to full seasonality in 2024. Many restaurateurs have been caught off guard by this "return to norm," as the last few years have accustomed them to operating on a week-to-week basis. However, the return to seasonal trends requires a mindset change.

With the Federal Reserve signaling the likelihood of rate cuts as soon as September, now is a great time to review the tax attributes of different income streams while considering strategies to lock in cash flows while rates remain high. Understanding the tax implications of various income sources can help you make informed decisions to optimize your tax liability. Here then is an overview of the tax attributes of several popular income streams.

Last year, Washington, D.C. updated its regulations with the Restaurant Revitalization and Dram Shop Clarification Amendment Act of 2024. The updated legislation went into effect last month, and includes a number of changes and updates to DC’s Dram Shop laws as well as a handful of gestures toward easing the pain of the chaos that is the protracted end of DC’s tipped minimum wage.

This is your friendly, regular reminder that as of January 1 this year, the US Department of the Treasury’s Financial Crimes Enforcement Network, or FinCEN, has been accepting Beneficial Ownership Information Reports, or BOI Reports. These reports are part of the Corporate Transparency Act, or CTA, which went into effect in 2024.

LFTL covers some suggested reading this month spanning the FLSA Minimum Salary increases, Starbucks, Grimace, and more.

Uber is shutting down the alcohol delivery service it acquired for north of $1.1 billion to fold it into the main UberEats app. There were other issues with Drizly, and the company line is that Uber wanted to deliver everything under one brand, but to shutter a $1B acquisition dovetails with a larger market shift that can be constructive to small business owners.

We see it all the time. The end of the year comes along and we get a detailed list of what you’ve paid in wages throughout the year. There, front and center, is a W2 being paid to a partner. Let’s take a closer look at this picture.

Phantom income often arises when using a passthrough entity. Often a problem for LLCs, S Corps, and partnerships, phantom income occurs when the business entity reports a yearly profit, yet the owner or investors in the business do not receive cash reflecting the allocation. The IRS still taxes the full amount of the business’s income, creating tax on unreceived income for business members.

“It’s not a lie, it’s an adjustment. It’s the rule of three….if a guy tells you how many girls he’s hooked up with, it’s not even close to that. You take that number and divide by three, then you get the real total. So if Kevin’s saying it’s been three girls, it’s more like one. Or none!....The Rule of three, it’s an exact science. Consistent as gravity.” – American Pie