As a franchise owner, tax season can feel like a maze… full of opportunities to save money but also potential pitfalls if you miss something.
The good news? With the right planning and guidance, you can maximize your deductions, avoid costly mistakes, and keep more of your hard-earned profits.
10 key tax tips every franchise owner should keep in mind:
1. Deduct Franchise Fees
Your initial franchise fee and ongoing royalty fees are often tax-deductible. While the IRS may require you to amortize some fees over time, make sure you’re capturing every deduction available. Don’t leave money on the table by overlooking these costs.
2. Track Marketing Contributions
Many franchises require contributions to a national or regional advertising fund. These contributions are deductible business expenses. Keep accurate records of your payments, they can make a noticeable difference at tax time.
3. Check in with Your Accountant
Don’t wait until April to meet with your accountant. Scheduling a year-end tax planning session can help identify strategies to minimize your liability and maximize deductions while you still have time to act.
With Franchise Resource you get:
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Consistency you can trust: Same people, same workflows, no hand-offs.
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Franchise-literate books: Royalties, brand fund, and required tech mapped correctly.
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Faster answers: Local time zone, real humans, proactive check-ins.
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Data protection: Fewer touchpoints = tighter controls.
4. Know Your Tax Responsibilities
Franchise owners may be subject to federal, state, and local taxes, including sales tax, payroll tax, and business income tax.
Understanding these obligations — and staying compliant — prevents penalties and ensures smoother cash flow.
5. Leverage Depreciation on Equipment & Assets
If you’ve purchased new equipment, computers, or furniture for your franchise, you may be able to write off the full cost immediately through Section 179 deductions or bonus depreciation. This can significantly lower your taxable income.
6. Take Advantage of the Qualified Business Income (QBI) Deduction
Many franchise owners structured as pass-through entities (LLCs, S-corps, partnerships) may qualify for the 20% QBI deduction on eligible business income. It’s one of the most powerful tax breaks available, but rules are complex, so get guidance from a tax professional.
7. Employee Tax Credits
If you hired employees from certain target groups (such as veterans or long-term unemployed individuals), you may qualify for the Work Opportunity Tax Credit (WOTC). Employee retention credits and other incentive programs may also be worth exploring.
8. Plan for State & Local Taxes
Every state has its own tax landscape, and some local municipalities add extra requirements. Franchise owners operating across multiple states must be especially careful. A proactive plan can help you avoid double taxation or compliance headaches.
9. Home Office Deduction (If Applicable)
If you manage part of your franchise operations from a home office, such as bookkeeping, marketing, or scheduling — you may qualify for a home office deduction. The IRS allows either a simplified deduction or actual expenses (utilities, rent, internet, etc.), but documentation is key.
10. Partner with a Franchise-Savvy Accountant
Not all accountants understand the nuances of franchising. By working with someone who knows the industry, you’ll benefit from tailored advice, improved compliance, and potentially thousands in tax savings.
Proof We Bring to the Table
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12+ years supporting dozens of brands and thousands of franchisees
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Clean, on-time closes and practical dashboards operators actually read
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Playbooks built from real unit-level data (what works and what doesn’t)
- 20+ years in the franchise world — as employees, owners, & advisors
Final Thoughts
Navigating tax season as a franchise owner doesn’t have to be overwhelming. With the right preparation and support, you can minimize stress, reduce your liability, and strengthen your business for the year ahead.
At Franchise Resource, we specialize in helping franchise owners like you with tax planning, bookkeeping, and CFO-level strategy.
Franchise Accounting You Can Count On
Based in Omaha, Nebraska since 2013, we have been providing professional and reliable bookkeeping services for franchise owners.
Our bookkeeping services are designed to make your life easier so that you can focus on what you do best!
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