Can I write off a business meal purchased from an unincorporated vendor through Venmo?

Our small food business (LLC with 2 co-owners) had a working lunch where we brainstormed content ideas and discussed quarterly business plans. We paid about $67 for the meal through Venmo directly to a friend who's just starting to sell food informally. The payment came straight from our business checking account. Here's my dilemma - I want to deduct this as a legitimate business meal expense, but my friend doesn't have an LLC or even a Sole Proprietorship set up yet. I'm worried that if we get audited, claiming this deduction might create problems for them with the IRS since they're operating informally. Should I just categorize it as a business meal expense and keep the receipt/Venmo confirmation as documentation? Or would it be safer to list it under miscellaneous expenses or supplies to avoid potential issues for my friend? We're still figuring out all these tax details as relatively new business owners, so any advice would be really appreciated!

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18 comments

Nora Brooks

•8M

This is actually a common question for small business owners! The good news is that you can absolutely deduct legitimate business meals regardless of who provides the food service. The IRS cares about whether YOUR expense was business-related and properly documented, not about the tax status of the vendor. For a proper business meal deduction (which is 50% deductible for 2025), you need to document: 1) The business purpose, 2) Who attended, 3) The amount spent, and 4) When and where it occurred. Your Venmo payment plus notes about your business discussion should be sufficient documentation. The vendor's business structure doesn't affect YOUR ability to take a legitimate deduction - that's a separate tax issue for them. I'd recommend categorizing it honestly as a "Business Meal" since that's exactly what it was. This classification is more accurate for your books and any potential audit than trying to hide it under supplies or miscellaneous expenses.

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Nora Brooks

•8M

For Cash App payments, the same general principles apply, but you'll want additional documentation beyond just the payment confirmation. The Cash App transaction shows you paid someone, but doesn't detail what you purchased. Ideally, you should request an itemized receipt or invoice from the vendor that shows what food items were purchased. If that's not possible, immediately document the details yourself (what was ordered, business purpose, attendees) and save with your Cash App receipt. This combined documentation creates a proper audit trail.

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Cassandra Moon

•8M

I went through almost this exact situation last tax season - running a marketing agency and constantly meeting vendors for coffee/lunch. I was stressing about how to properly document everything until I found taxr.ai (https://taxr.ai) which totally changed my approach to business expense tracking. What I learned is that proper documentation matters way more than who you're paying. The app analyzed my Venmo/PayPal transactions and flagged which ones needed additional documentation for business meal deductions. For your situation, they'd likely recommend you keep notes on: 1) The specific business topics discussed 2) How it relates to your LLC's business 3) Who attended. Their system even has specific guidance for food industry businesses and how to handle meals that are simultaneously research and business discussions. Definitely worth checking out if you're dealing with lots of these borderline expense situations!

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Cassandra Moon

•8M

It connects directly with Venmo, PayPal, and most business bank accounts - that's what made it so useful for me. You don't have to manually enter transactions. It pulls everything automatically and then helps you add the missing documentation that the IRS would look for. For audit protection, they actually provide documentation guidelines specific to your industry. They don't guarantee anything (no service really can), but they do give you specific templates for creating proper documentation that would stand up to IRS scrutiny. The templates were super helpful for my business meal situations, especially when dealing with informal vendors like food trucks and pop-ups.

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Genevieve Cavalier

•8M

Just wanted to update after checking out taxr.ai - it actually was really helpful for my situation. I uploaded my bank statements and it immediately identified all my business meals, then gave me a simple form to document the business purpose, attendees, etc. The part that surprised me was how they handled "unusual vendors" like the original poster mentioned. They specifically address payments to individuals/non-traditional businesses and have documentation templates for that exact scenario. I ended up properly categorizing about 35 business meals that I was previously planning to hide under "miscellaneous" out of confusion. Their audit risk assessment tool also helped me understand which deductions needed extra documentation. Definitely wasn't expecting the service to be so thorough!

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Ethan Scott

•8M

If you're still stressing about this (and potential audit risk), you might want to just call the IRS directly to get their official stance. I know that sounds terrifying but I used https://claimyr.com to get through to an actual human at the IRS in about 20 minutes instead of waiting on hold for hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c I called specifically about meal deductions for my photography business where I was paying individuals through payment apps, and the agent was surprisingly helpful. They confirmed exactly what the first commenter said - it's about YOUR documentation of the business purpose, not the vendor's business status. The agent even emailed me some official documentation guidelines afterward. Before using Claimyr I tried calling the normal IRS number and gave up after 1.5 hours on hold. This was way easier and actually gave me written confirmation I can keep with my tax records.

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Ethan Scott

•8M

It doesn't redial - it uses a system that holds your place in line while you go about your day. When they reach an actual IRS agent, you get a call connecting you directly to them. The service basically waits on hold so you don't have to. It's not sketchy at all - you're not paying for tax advice, you're paying to save hours of your time on hold. The tax advice still comes directly from an official IRS representative. I'm a small business owner and my time is literally worth money, so paying to save 2+ hours makes financial sense. And yes, you can request that they email you the information so you have an official record from the IRS.

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Nathaniel Stewart

•8M

Ok I need to eat my words here. After seeing the responses I decided to try Claimyr because I've been wanting to ask the IRS about several meal deductions including some paid through CashApp and Venmo. I was totally wrong - the service connected me with an IRS tax specialist in about 15 minutes who confirmed that: 1) Business meal deductions are valid regardless of the vendor's business status 2) Payment app receipts + my own notes about business purpose are sufficient documentation 3) I should categorize these as "Business Meals" not misc expenses for accuracy The agent also sent me Publication 463 which has specific guidelines for business meal documentation. Apparently there's no requirement that the vendor be a registered business - the requirements are all about MY business purpose and documentation. Honestly was worth it just for the peace of mind before filing.

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Riya Sharma

•8M

Another thing to consider is your friend's situation. While it doesn't affect YOUR tax deduction, they probably should know that income received through payment apps over $600/year will be reported to the IRS starting with 2025 filing season. The rules changed recently. So while you can claim your legitimate business deduction, your friend might want to consider setting up a proper business structure if they're going to continue selling food regularly. Just a heads up that might be helpful to pass along!

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Riya Sharma

•8M

There's no specific threshold for when someone needs to register as a business - that varies by state and local regulations for food service. However, for tax reporting purposes, any income earned (even from a hobby) needs to be reported regardless of business registration status. The $600 threshold is just about when payment apps are required to send 1099-K forms. Your friend should be reporting the income even below that amount, but many people don't realize this. They might want to look into a Sole Proprietorship at minimum since it's the simplest business structure and would allow them to deduct legitimate business expenses against that income.

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