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Don’t let the IRS stand for……
I RUN SCARED
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There is more to operating a restaurant
besides cooking food
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What you don’t know can affect your
business
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What you don’t know can affect you
personally
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You have exposure with multiple
government agencies
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Internal Revenue Service
Georgia Department of Labor
Georgia Department of Revenue
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May conduct various audits
Income & expense audit
 Labor audit
 Officer compensation audit
 1099-K audit
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May conduct various audits
Labor audit for tips
 Labor audit for worker misclassification
 Labor audit for officer compensation
 Labor audit for employee benefits


5% of Employers get audited annually

May conduct various audits
Sales tax audit
 Payroll tax audit

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Tip reporting (Due February 28)
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1099-K (Merchant Reporting)
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E-Verify (http://www.uscis.gov/e-verify)
W-2 Reporting (Due February 28)
1099 Reporting (Due February 28)
Payroll Reporting & Paying Taxes
Tax Return Filings
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Employee’s must report tips to employer
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Tips are taxable for payroll taxes
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Tips must meet MINIMUM 8% of gross
sales
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IRS can conduct tip audit and assign tip
factor
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Must process new hires through E-Verify

Hiring workers that are not processed
through E-Verify may cause an IRS or
labor audit
 http://www.uscis.gov/e-verify
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W-2’s and 1099’s are due to workers by
January 31
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Due to IRS and SSA by February 28
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Due March 31 if filing electronically
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Late filing penalties assessed per W-2
and 1099
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Issue a 1099-MISC to any individual paid
$600 or more for the year
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Your employee’s are not independent
contractors!
Cleaning crew
Food vendors
Contractors and handy man
Contract bookkeeper

Hire a knowledgeable and reputable firm
to handle payroll processing

Payroll taxes need to be paid each pay
period
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Payroll taxes penalties accrue daily!
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You are responsible for payroll taxes even if
a third party processes your payroll
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100% Trust Fund Penalty assessed against all
responsible parties
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Liens will be issued against business
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Levy will be issued against bank and
merchant accounts
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IRS can come after you personally!
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Business tax return due by March 15
annually
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With extension tax return due by
September 15
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S Corporations and Partnerships late filing
penalties – ($195 per shareholder per
month)
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How should you report your income and
expenses?
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Cash or Accrual Basis
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Must select basis on the first year tax
return filing
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Hire a licensed & reputable accountant
or tax professional
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Ask questions to make sure it’s a good fit
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Make sure they have experience with
restaurant accounting
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Not everyone is made equal

Unlicensed (Unenrolled) tax preparers
can only do taxes
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They can’t represent audits or collections
cases
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Be sure to hire a licensed professional

What type of entity should your restaurant
operate as?
Limited Liability Company
S Corporation
C Corporation
Partnership
Sole Proprietorship

Not all entities provide the same tax
benefits
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What kind of records should you
maintain?
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How long should you keep records for?
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How should you keep your records?
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Which accounting software should you
use?
QuickBooks Desktop
 QuickBooks Online
 Xero


The IRS can request a copy of your file
during an audit
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Keep books with a good Chart of
Accounts
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Develop chart of accounts that work for
your restaurant
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Sub accounts and detailed reports are
important
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Good chart of accounts provides
accurate information
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Provides accurate food and labor cost
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Must keep food cost between 27-30%
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Must keep labor cost under 30%
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S Corporations must pay officer
compensation to shareholders/owners
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Don’t take all your profits as distributions
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Lack of officer compensation is a recipe
for an audit!
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Gifts to employee’s
$25 max per employee
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Bonuses to employee’s
Must be paid through payroll

What is deductible?
Cell phones
 Automobiles
 Mileage – standard deduction
 Home office rent
 Meals & Entertainment for business
meetings
 Tip Credit

Best of luck with in your restaurant
endeavor
For additional information contact
Andrew G. Poulos
(770) 938-6300
www.savvytaxguy.com
www.savemefromirs.com