Delivery Fee Question

Business By asascakes Updated 17 Jan 2015 , 5:11pm by MimiFix

asascakes Posted 14 Jan 2015 , 11:56pm
post #1 of 9

Hey all I have a question about delivery fees.I am still newer at the whole business side of this (recently got my license and health permit too! woohoo :))

 

I am working on fine-tuning my cake contract so my question is: as of now I include delivery/setup of specialty/event cakes within 15 miles of me (I do this because I prefer delivering them as it is still stressful to transport them and I can't fathom letting someone else/inexperienced pick them up or what would happen to them). Beyond 15 miles I want to charge $1/mile roundtrip (or 0.50/mile), but would I charge the fee starting at 15 miles (subtracting what I already include), or for the whole distance?

 

So for example: if "Bob" wanted a cake delivered 30 miles from me, should I just charge him $15 (the difference) or $30 (for the entire trip).

 

Also, a side-question: If I can write-off business mileage at tax time, say for going to buy supplies, meeting for consultations, etc., does this still include mileage/deliveries customers pay for?

 

Thanks in advance and any advice is appreciated, even if you think I'm silly for delivering for free :-)

8 replies
-K8memphis Posted 15 Jan 2015 , 12:08am
post #2 of 9

i think you should charge the difference if that's what you want to do --give the same free miles to each customer though.

costumeczar Posted 15 Jan 2015 , 1:20am
post #3 of 9

Quote:

Originally Posted by asascakes 
 

 

 

Also, a side-question: If I can write-off business mileage at tax time, say for going to buy supplies, meeting for consultations, etc., does this still include mileage/deliveries customers pay for?

 

Thanks in advance and any advice is appreciated, even if you think I'm silly for delivering for free :-)

You're silly for delivering for free! :-D That's your time, charge for it. The car mileage write-off is to cover wear and tear on your car, not your time. You can still use that mileage for your taxes whether you do or don't charge for it.

cakesbycathy Posted 17 Jan 2015 , 2:15am
post #4 of 9

 I offer free delivery in my town only.  If you live outside my town I charge $1.75 per mile which I calculate using Mapquest.  I don't care if you live just 5 miles outside of my town, you pay for the entire mileage from my house to yours.  I do sometimes make exceptions for clients that live right on the border. 

johnson6ofus Posted 17 Jan 2015 , 2:56am
post #5 of 9
Quote:
Originally Posted by cakesbycathy 
 

 I don't care if you live just 5 miles outside of my town, you pay for the entire mileage from my house to yours. 

As a consumer, I would find this unfair. But, as a business owner you have the right to set your own policies. 

 

I would believe any delivery policy you can "publish" and stick with is fine. I like, "We calculate mileage based on Map quest from point A to point B. We charge $1.50 per mile, round-trip, with the first 20 miles free." That way, it is fair to all. 

 

As far as the IRS, ANY payment you receive is taxable money regardless if you call it "cake fee" or "delivery fee". 

 

Any expense for delivery (mileage) is then deducted from you taxable profits. For 2014 that was $.56/ mile and 2015 will be $.575 per mile (which covers gas, expenses, insurance, etc--- although there are other ways to write off business use of a vehicle).

johnson6ofus Posted 17 Jan 2015 , 2:57am
post #6 of 9

Not that you have to be "fair"... but it seems to make sense. 

MimiFix Posted 17 Jan 2015 , 3:56pm
post #7 of 9
Quote:

Originally Posted by johnson6ofus 

 

... As far as the IRS, ANY payment you receive is taxable money regardless if you call it "cake fee" or "delivery fee". 

 

Any expense for delivery (mileage) is then deducted from you taxable profits. For 2014 that was $.56/ mile and 2015 will be $.575 per mile (which covers gas, expenses, insurance, etc--- although there are other ways to write off business use of a vehicle).

 

For tax purposes, there are two ways to do this. (1) If a business keeps track of all mileage and deducts the delivery mileage as a business expense, the delivery charge is declared as income. However (2) if delivery fee is based on mileage only, at the allowable rate, and no mileage deduction is declared, the fee is considered a reimbursable expense and not considered income. 

 

This either/or situation also applies to adjunct teachers who are expected to bring their own supplies. Schools pay the instructor for class time; all ingredients and materials are supplied by the instructor. Students pay the school for their class and pay each instructor a materials fee. The IRS considers "materials fee" a reimbursement for expenses and it's not declared as income.  

johnson6ofus Posted 17 Jan 2015 , 4:26pm
post #8 of 9

Defer to Mimi...

 

I abbreviated it for simplicity sake, but Mimi detailed all the options. :D

MimiFix Posted 17 Jan 2015 , 5:11pm
post #9 of 9

The most annoying aspect of keeping records: some regulations are not easily understood and if an average taxpayer calls the IRS for clarification, employees have been known to give out differing interpretations. That's part of what pushed me into using an accountant. :wink: 

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