Luxury wedding rentals operate like a logistics firm and a design studio at the same time. Your tax approach has to respect both: heavy capital spend on durable inventory (sofas, bars, lounge sets, dining tables) plus high-touch services (delivery, setup, styling). Here is a concise playbook to protect margins and cash flow while staying compliant.
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Most rental furniture fits into 7-year MACRS; props/lighting may be 5-year. Choose methods that reflect how quickly your pieces age.
- Bonus vs. Section 179:Model federal/state impact (many states decouple). Use 179 carefully if income is low.
- Partial dispositions:When a sofa or bar is trashed or sold, record a retirement to stop depreciating ghost assets.
- Ledger discipline:Keep in-service dates, class lives, warehouse tags separate from the design catalog.
2) Rental Property vs. Inventory
Chairs, sofas, bars, and arches rented repeatedly are capital assets—not resale inventory. Avoid pushing them through COGS.
- Consumables:Linens, candles, cleaning supplies can often be expensed; set thresholds and a written policy.
- Refurbs:Upholstery refresh and repainting are usually repairs; structural rebuilds lean toward capitalization.
3) Sales Tax, Use Tax, and Sourcing
Rental tax rules differ by state: some tax the rental charge; others tax your original purchase (use tax) and exempt the rental.
- Nexus mapping:Warehouses, delivery routes, and frequent pop-up locations can create nexus.
- Bundling:Separate design/delivery from rental charges if your state taxes rentals to avoid over- or under-collecting.
- Exempt purchases:If rental charges are taxed, your purchases may be exempt as “for rental”—keep certificates on file.
💡 Quick check
List your top 5 delivery destinations. If multiple states appear, confirm registration and sourcing rules before peak season.
4) Deposits, Damage Waivers, and Insurance
- Security deposits:Not income if refundable; reclassify only when retained and offset with repair/replacement costs.
- Damage waivers:Often taxable where rentals are taxable. Treat as service income; keep terms clear in invoices.
- Casualty losses:If insurance reimburses a destroyed piece, record gain/loss correctly and time replacements for cash flow.
5) Logistics Costs and Per-Job Tracking
Delivery, setup, teardown, and overtime eat margins fast. Tag costs to jobs for pricing discipline.
- Fleet vs. outsource:Capitalize truck upfits; expense third-party freight appropriately.
- Per-job tagging:Fuel, tolls, rush rentals, and overtime tied to events help reset minimum order thresholds.
6) Entity, QBI, and Payroll
- QBI:If your rental activity qualifies as a trade or business, the 20% deduction may apply (subject to wage/property limits).
- Reasonable comp (S corps):Owners who sell/design/drive must take reasonable wages before distributions.
- PTE tax elections:In high-tax states, consider pass-through entity tax elections to restore SALT deductibility.
Fast compliance checklist
- Validate sales/use tax registrations and exemption certificates.
- Update fixed-asset ledger; record retirements and partial dispositions.
- Refresh capitalization and de minimis policies; keep invoices.
- Reconcile deposits held vs. released; document damage claims with photos.
- Confirm payroll classifications for drivers, crew, and designers.
7) Procurement Timing and Cash Flow
- Seasonality:Place big purchases before peak season to start depreciation sooner, but model income to avoid over-accelerating.
- Vendor terms:Compare early-pay discounts vs. conserving cash for labor and marketing before peak weekends.
Disclaimer:Informational only, not tax advice. Work with a tax professional who knows your facts and the states where you operate.
