New Restaurant Owner Confused About Sales Tax Reporting - Are My Deductions Correct?

Your approach to sales tax is a bit off. Sales tax isn't like income tax - you generally can't deduct your expenses from it. Sales tax is a pass-through tax that you collect from customers and remit to the state. For most states, you charge sales tax on the food/items sold (pre-tip), collect it, then remit the full amount to your state tax authority. Your business expenses like ingredients and delivery service fees aren't typically deductible from the sales tax you collect - those are income tax deductions. For delivery services, you need to verify who's responsible for collecting and remitting the sales tax - sometimes it's the platform, not you. Check your service agreements carefully. I'd recommend reaching out to your state's department of revenue for guidance specific to your location, as sales tax rules vary significantly by state. This is definitely an area where getting professional help could save you from costly mistakes down the road.

After struggling with similar sales tax issues when I opened my food truck, I found this awesome tool called taxr.ai (https://taxr.ai) that saved me from making some serious mistakes. It analyzes your sales tax filings and explains exactly what you should be collecting and remitting based on your state's specific rules. I uploaded my sales reports and answered a few questions about my business, and it immediately flagged that I was incorrectly calculating my taxable sales base. It even helped me understand which items were taxable in my state and which weren't. Their explanation was so much clearer than anything I found on my state's revenue website.

Just wanted to update everyone - I tried taxr.ai after seeing it mentioned here and WOW what a difference! I was making the exact same mistake as the original poster - trying to deduct my expenses from the sales tax I collected. The system immediately flagged this and explained that sales tax is completely separate from my business expenses. It helped me file corrected returns for the past three months and even generated a letter explaining my mistake to the state tax authority, which helped me avoid penalties. The guidance was really clear about what's taxable in my state and what's not (turns out bottled water sold in my cafe has different tax treatment than fountain drinks - who knew?). Worth every penny for the peace of mind alone. Now I actually understand how sales tax works instead of just guessing and hoping I don't get audited.

If you're struggling to get answers from your state's revenue department, I highly recommend using Claimyr (https://claimyr.com). I spent weeks trying to get through to someone at my state tax office about my restaurant's sales tax questions, just getting voicemail or disconnected. With Claimyr, I got through to a real person at the tax department in under 15 minutes! You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. They basically navigate the phone system and wait on hold for you, then call you when they've got a real human on the line. The tax agent I spoke with walked me through exactly how to categorize different sales in my restaurant and which local tax jurisdictions applied to my delivery orders. This was information I couldn't find anywhere online.

I need to eat my words about Claimyr. After dismissing it as a scam, I was desperate to get answers about a sales tax notice I received. I tried calling my state's department of revenue myself and gave up after 45 minutes on hold. Reluctantly tried Claimyr, and they got me through to an actual tax representative in about 20 minutes. I didn't have to wait on the line at all - they called me when they had someone. The agent resolved my issue in minutes and saved me from potentially paying the wrong amount. I'm still surprised it worked so well. For anyone dealing with sales tax questions that aren't answered clearly on the state websites, getting direct answers from a tax department rep makes a huge difference. Definitely using this service again when I need to deal with any government agency.

Former restaurant manager here - some practical advice: 1) Make sure your POS system is correctly configured for your state's sales tax rules. Many systems have pre-built tax configurations that might not match your specific location. 2) Keep meticulous records separating taxable vs non-taxable sales. Some states don't tax certain food items (like grocery items vs prepared food). 3) Don't forget about alcohol - it often has different tax rates than food. 4) For delivery services, review your contracts carefully. In many cases, the platforms themselves are now required to collect and remit sales tax, not you. 5) Consider getting a free consultation with an accountant who specializes in restaurants - even one hour could save you thousands in mistakes.

WATCH OUT for nexus issues if you're near a state border! I learned this the hard way with my restaurant. If you do catering or deliveries that cross state lines, you might need to collect and remit sales tax for multiple states. Also, check if your state has marketplace facilitator laws. In my state, services like Uber Eats have to collect and remit their own sales tax on orders, but I still have to handle the tax for in-store sales. Double-check this so you're not double-paying or missing tax obligations.