Category Archives: Restaurant Bonuses and Incentive Plans

Profits Interest: Tax Free Equity in a Restaurant Partnership

If structured effectively, issuing sweat equity can reward and incentivize employees in a restaurant group. However, when the equity in an LLC (taxed as a partnership) is granted, the value of that equity is generally taxed upon vesting, thus subjecting the employees to tax without receiving any cash. The value of the equity is also

Structuring a Restaurant Management Company and Fee

A restaurant management company separates your management team from the rest of your restaurant operations so that you can scale and grow safely and efficiently. A management company can: consolidate and streamline ownership of your managing/founding partners and leadership team; create an extra layer of liability; create economies of scale and buying power; streamline management,

Guaranteed Payments vs Distributions

For many restaurant owners, guaranteed payments and distributions to owners may not come up until it’s time to file the annual tax returns. If you’re a restaurant client of The Forks CPAs, you’ll hear about guaranteed payments and distributions throughout the year because the distinction impacts your finances and taxes significantly. But what exactly are

The Ideal Restaurant Management Incentive Plan in 3 Steps

The rise in operating costs and shortage of restaurant labor has forced restaurant owners to incentivize key employees with performance bonuses and equity by building the ideal restaurant management incentive plan. The ideal incentive or bonus plan should: Incentivize and reward key employees for increasing profitability and improving the hospitality experience; Provide an ROI to

How Much Should Restaurant Owners Be Paid?

“How much should restaurant owners be paid?” is not the most common question we get, but it is certainly a key question that should be asked and answered. A successful restaurant must be able to create value beyond its owner’s abilities. The only way to understand a restaurant’s value creation is through accurate and representative

How Distributions and Profit & Loss Allocations are Taxed

Welcome to the second portion of restaurant capital and ownership series: How Distributions and Profit and Loss Allocations are Taxed! In Part I, Raising and Distributing Capital for Restaurant Startups, we discussed what capital is, how to read an operating agreement, and we walked through an example showing how capital is distributed among owners. In

Raising and Distributing Capital for Restaurant Startups

raising and distributing capital

This is part 1 of a 2-article series. Please check back to read our article on taxation of distributions and allocation of profits and losses. You are a restaurateur with a great idea for a restaurant and feel it is a cannot-miss investment opportunity. There are several different options to raise the capital you need

Incentivizing Restaurant Employees with Ownership Equity and Profits

If you have been in the restaurant industry for a while, you have probably heard some buzz about alternative pay structures for your managers and employees, such as granting ownership, equity, or deferred compensation. While these ideas might seem tempting to attract and retain good talent, figuring out the differences and tax consequences can be