- Monthly bookkeepingPOS, card processor and delivery app deposits reconciled to your sales.Learn more about Monthly bookkeeping →
- Payroll & tipsTipped payroll, tip reporting and year-end W-2s.Learn more about Payroll & tips →
- Sales taxFilings in New Jersey and New York, and catch-up help if you fell behind.Learn more about Sales tax →
- Equipment & build-outsWrite-offs for kitchen equipment and interior improvements.Learn more about Equipment & build-outs →
Know your numbers every month
- Reconcile sales to deposits. Card processors deposit sales net of fees and often net of tips, and delivery apps pay out net of commissions. Record gross sales and the fees separately so your income, sales tax and payouts all tie together.
- Check who collects the sales tax. Some delivery platforms collect and remit sales tax on their orders. Confirm which ones do, so those sales are neither taxed twice nor missed.
- Watch prime cost. Food, beverage and labor together are the costs you control most. Tracking them as a percentage of sales every month shows problems while you can still fix them.
- Count inventory. A monthly count, at minimum, turns food cost from an estimate into a number. A year-end count also matters for the tax return.
Tips, payroll and the tip credit
- Tip reporting. Employees who receive $20 or more in tips in a month must report them to you by the 10th of the next month. You withhold income tax and the employee’s Social Security and Medicare tax on reported tips, and pay the employer share.
- The FICA tip credit (Section 45B). Food and beverage employers can claim a federal income tax credit for the employer Social Security and Medicare tax paid on tips above the amount needed to bring an employee to the federal minimum wage of $5.15 an hour used for this credit. It is claimed on Form 8846, and many restaurants miss it.
- Form 8027. Large food or beverage establishments, where tipping is customary and more than 10 employees work on a typical business day, file an annual information return on tip income and allocated tips.
- “No tax on tips.” For 2025 through 2028, employees in listed tipped occupations can deduct up to $25,000 of qualified tips on their federal income tax return. Employers report qualified tips and occupation codes on W-2s. It does not reduce payroll taxes, and service charges and automatic gratuities are wages, not tips.
- State wage rules. New Jersey and New York set their own tipped minimum wage, tip credit and tip pooling rules, so payroll has to follow the state where the restaurant operates.
Sales tax on food and drink
In New Jersey, prepared food and restaurant sales are generally taxed at 6.625%. In New York, they are taxed at the 4% state rate plus the local rate, for 8.875% in New York City. Whether a service charge or mandatory gratuity is taxable depends on how it appears on the check and whether it goes to staff, so check before adding one.
Equipment and build-outs
Kitchen equipment, furniture and point-of-sale hardware can usually be written off in the year they are placed in service through Section 179 or bonus depreciation, which the 2025 tax law made permanent at 100% for property acquired after January 19, 2025. Interior improvements to a commercial space are generally qualified improvement property with a 15-year life, which also qualifies for bonus depreciation. Buying the building instead? A cost segregation study may speed up the write-offs.
Frequently asked questions
Do restaurants get a tax credit for tips?
Often, yes. The Section 45B credit lets food and beverage employers recover the employer Social Security and Medicare tax paid on tips above the amount needed to reach the federal minimum wage used for the credit. It is claimed on Form 8846.
What is Form 8027?
An annual information return on tip income and allocated tips. It is required for large food or beverage establishments, where tipping is customary and more than 10 employees work on a typical business day.
How does “no tax on tips” affect my restaurant?
Your employees may deduct up to $25,000 of qualified tips on their federal returns for 2025 through 2028. You still withhold and pay payroll taxes on tips as before, and you report qualified tips and occupation codes on their W-2s.
How should I record delivery app sales?
Record the gross sale and the platform’s commission separately rather than just the net payout, and confirm whether the platform collected the sales tax, so your income and sales tax returns are both right.
How often should I count inventory?
At least monthly, to know your real food cost. A year-end count is also needed for an accurate tax return.