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What Tax Records Should a Restaurant Keep for Sales, Tips and Payroll?

Short answer

Keep point-of-sale reports, payment-processor settlements, bank deposits, sales tax returns, tip reports and payroll records. Reconcile them by period rather than treating bank deposits as gross sales.

Why this matters

Card deposits may be reduced by merchant fees, refunds and paid-out tips. Employee-reported tips affect payroll tax calculations. Larger food or beverage establishments may also have Form 8027 reporting duties.

Example

A $10,000 POS sales report may settle to a lower bank deposit after fees and refunds. The difference needs a clear reconciliation; it is not automatically missing revenue.

What to review

Review taxable sales categories, tip pooling, service charges, payroll reports, inventory and deposit timing.

Official source: www.irs.gov/businesses/small-businesses-self-employed/tip-recordkeeping-and-reporting

Related service: Restaurant & Franchise Accounting

This answer is general information, not advice for your specific situation. Tax rules change, so please contact us to review your facts before acting.

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