Headquarters requires a new interior according to their standards — how do I expense that?
Interior work done to headquarters specifications is classified as a depreciable asset just like any other interior, and if a single transaction exceeds 1 million KRW, it should, in principle, be expensed over its useful life. Store equipment like espresso machines, refrigerators, and POS systems is subject to the same standard, and royalty, logistics fees, and advertising co-op fees paid to headquarters should be recorded as a fully deductible expense at the time incurred, based on settlement statements and tax invoices.
The Most Confusing Part — Managing Revenue and Expenses Based on Headquarters Settlement
Understanding the settlement structure with headquarters correctly prevents revenue and expense filing errors
Split revenue and expenses based on the headquarters settlement statement
The monthly settlement statement your franchise headquarters issues includes revenue, royalty, and logistics fees together. Don't record the settlement statement as revenue as-is — you need to separately reflect your actual revenue and the amounts paid to headquarters.
Royalty, logistics fees, and advertising co-op fees are all necessary expenses
Royalty, raw material logistics fees, and advertising co-op fees paid to headquarters are all business-related expenses and fully deductible. Check your headquarters tax invoices every month to make sure nothing is missed.
Income Structure of Franchise Cafe Locations
Key Expense Items
Must-Read for Franchise Cafe Location Owners
Split Your Location Equipment & Headquarters Costs by Type to Save on Taxes
From store interior to royalty, categorizing each item correctly cuts unnecessary tax
Long-Term Fixed Assets — Depreciable Equipment
Store equipment: headquarters-standard interior, espresso machine
Store fixtures: refrigerator, POS system
If a single transaction exceeds 1 million KRW, it's classified as a depreciable asset and must be expensed over its useful life.
Headquarters-Supplied Raw Materials — Immediately Deductible
Coffee beans, syrup, and secondary ingredients supplied by headquarters are fully expensed at the time of purchase. Since these are purchased through the headquarters logistics system, verify whether a tax invoice was received alongside the settlement statement.
Personnel Service Costs — Part-Time Wages
Part-time staff require withholding tax filing (by the 10th of the following month) and a payment statement submission, regardless of hours worked.
Royalty, Logistics Fees & Advertising Co-op Fees
Royalty, logistics fees, and advertising co-op fees paid to headquarters are recurring monthly expenses, fully deducted at the time incurred based on the headquarters tax invoice.
| Category | Examples | Tax Treatment |
|---|---|---|
| Long-term fixed assets | Headquarters-standard interior, machine, POS | Depreciate if over 1 million KRW |
| Headquarters-supplied raw materials | Coffee beans, syrup, secondary ingredients | Fully deductible at purchase |
| Personnel services | Part-time wages | Withholding tax filing, payment statement submission |
| Royalty & logistics fees | Royalty, logistics fees, advertising co-op fees | Immediately deductible |