Sales tax compliance for restaurants can be a daunting task; managing proper tax collection, adhering to filing deadlines, selecting and utilizing reporting software, payments and the dreaded notices from various departments of taxation can be a full-time job. Additionally, restaurants have to deal with various industry-specific transaction taxes such as local food and beverage taxes, alcohol taxes and prepared food taxes, all of which may require a separate filing. Not only do all of these taxes create an administrative burden on restaurant owners and managers who are already stretched thin, but they can also create exposure risk if the proper steps are not taken to ensure that a monthly sales tax compliance process is in place.

With accounting staff already stretched thin, sales tax compliance is often handled by an individual who is already responsible for many other tasks, and the monthly process may not receive the proper attention it deserves, which could lead to late or even missed returns. Regularly filing late returns, non-filing, or not timely addressing sales tax notices can lead to an audit, further monopolizing the time and resources of the restaurant staff that could be better served handling day-to-day operations and planning for the future.

Fortunately, there are affordable outsourcing options available to assist restaurants in not only navigating their sales tax compliance process but also being proactive in addressing and cleaning up items to limit future sales tax issues. Utilizing a third party to assist with sales tax compliance also will afford restaurants access to an expert who can also provide guidance on sales and use tax issues beyond monthly filing requirements and help to stay abreast of the current sales tax landscape. Additional benefits of outsourcing sales tax compliance include:

  • Increased level of compliance accuracy;
  • Reduction of audit risk and exposure through improved compliance and documentation;
  • Reduction of the overall cost of compliance;
  • Management of notices and correspondence from taxing authorities;
  • Allow internal resources to focus on higher-value strategic plans and company operations;

Evaluating sales tax compliance outsourcing, or at the very least, a checkup of the current sales tax compliance process should be at the top of every restaurant owner’s to-do list. Having the peace of mind that sales tax compliance is being properly handled is one less thing that a restaurant owner has to worry about so that they can spend more of their valuable time on the business operations that make the restaurant successful.

For assistance with sales tax matters that your restaurant may be experiencing, or to learn more about sales tax compliance outsourcing, contact a member of GBQ’s restaurant team.


Article written by:
Jeff Monsman, JD
Director, State & Local Tax Services

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