In short

Restaurant tax support centres on records that are specific to food service: reconciling sales tax collected in the point-of-sale system to the returns, keeping tip reporting records for employees, documenting equipment and leasehold improvements for depreciation, and separating owner meals and personal use from business costs. We organise these items through the year so the year-end return and any state filings can be prepared from a clean package.

Tax for restaurants has a few areas that most other small businesses never deal with: large volumes of sales tax, employee tip reporting, and significant spending on equipment and fit-out. Getting those right is mostly a matter of keeping the right records as you go.

Sales tax from the point of sale

Your POS calculates sales tax on every check, but the system settings, menu items marked taxable or exempt and delivery-platform collections all affect what you owe. We reconcile tax collected in the POS to the liability in the books each period, and investigate differences before returns are filed. If you operate in more than one state, our state guides link to each official revenue site.

Tips and payroll taxes

Tips are part of employee pay for tax purposes. The IRS explains employer obligations around tips and wages in Publication 15. We make sure the tip amounts in the POS flow into payroll, that cash tips reported by staff are captured, and that the records match the wages reported on payroll returns.

Equipment, fit-out and repairs

A new walk-in cooler, a dining room renovation and a repair to a fryer are treated differently. Some are capital improvements recovered through depreciation; others are deductible repairs. Publication 946 is the IRS guide to depreciation. We keep invoices and descriptions so your preparer can make that call with full information.

Owner meals and personal use

Owners eat at their own restaurants and sometimes use business accounts for personal items. We record those consistently so they do not inflate business expenses, and we flag them for your preparer.

Year-end package

  • Sales tax reconciliation by period
  • Tip and wage reconciliation to payroll returns
  • Fixed asset additions with invoices
  • Inventory count at year end
  • Owner draw and personal-use summary

If you have a preparer, we hand them this package. If you need preparation too, we can discuss it as part of an agreed engagement. See our tax services, our work with restaurants, or book a consultation.