Running a restaurant can be incredibly time consuming, not to mention stressful; with staff to manage, food costs to control, and customers to keep satisfied, there’s precious little time left to think about taxes. But, neglect your taxes as a restaurant owner, and you could end up being targeted for an audit, or face unexpected penalties that wipe out your profits for the year.
Fortunately, working with services that provide professional tax planning in Coral Springs, can ease the anxiety commonly associated with restaurant taxes, and provide you with an approach that is systematic and strategic. From protecting your precious business and making the most of any deductions you might be eligible for, to keeping you on the right side of the IRS, tax services designed specifically for restaurants, can be instrumental in the success of your business.
Working with tax services can also help you avoid these common, and often costly, mistakes:
Misreporting tips
This is a mistake commonly made by restaurant owners, and is one that the IRS are particularly fond of scrutinizing. Below are some common tip reporting blunders:
· Staff not being trained to understand tip reporting requirements
· Income from tips and how they are allocated not being documented appropriately
· Tip reports being filed late
· Tip income taxes not being calculated accurately.
Mistakes made when reporting tips can lead to serious consequences, which can include back taxes, penalties, and investigations from the Department of Labor.
Neglecting sales tax on taxable items
If as a restaurant owner, you’re not aware of which items in your jurisdiction are taxable, you’re highly likely to make mistakes in terms of sales tax compliance. Rules can vary greatly between states, and in some instances, even between municipalities in the same state. Below are some common sales tax blunders:
· Failing to understand that taxation is different for food and grocery
· Overlooking taxes on delivery fees
· Applying the wrong tax rates to beverages that are alcoholic
· Not treating service charges properly
· Using the wrong rates for certain delivery areas
Not withholding and filing payroll tax adequately
Restaurant payroll is notoriously complex, but mistakes made by restaurant owners related to payroll taxes can lead to personal liability. Below are some common payroll tax blunders:
· Miscalculating tip credits
· Using incorrect overtime rates for tipped employees
· Classifying employees incorrectly as independent contractors
· Making payroll tax deposits late, and filing late
· Handling multi-state employees incorrectly
Overlooking deductions and credits
Not knowing what deductions and credits may be available to them as a restaurant owner, or not having adequate documentation to support a claim, can lead to them missing out on useful tax benefits that could have impacted their profitability. Working with an accounting firm in Fort Lauderdale who specialize in restaurant taxes, can help you avoid missing out on these frequently overlooked deductions and credits:
· Expensing equipment that qualifies immediately, instead of taking advantage of Section 179 depreciation
· Failing to properly categorize facility costs under repair versus improvement
· Staff development expenses under training and certification
· Marketing and promotion for the cost of acquiring customers and retaining them
· Professional development for continuing education of employees and attendance of industry conferences
Bookkeeping, accounting and tax planning for restaurants can be complicated, and no restaurant owner can be expected to know everything about their taxes. However, it is your responsibility as a restaurant owner to get your taxes right every year, whether you file them yourself, or use tax planning services, so getting on top of them with professional help, is strongly recommended for the future of your business.
