The hospitality industry, while potentially lucrative in CA, can also be one of the trickiest industries when it comes to accounting and taxes. Oftentimes, bar and restaurant employees are paid through a combination of tips and a reduced server’s wage. It is important both for owners and employees to ensure tips are recorded and claimed accurately on tax returns.
Restaurants, bars and nightclubs make up a significant portion of businesses in California. Owners of such businesses also face unique tax code and income reporting requirements, and without the right guidance, can face stiff tax penalties. If you own a restaurant, bar, or nightclub in California, you need an accountant who can provide sophisticated tax planning advice.
It’s important to note that restaurant, bar or nightclub owners can be held personally liable for any unpaid sales or payroll taxes if the establishment goes under. While this can happen in any business, it is especially relevant to high turnover industries such as food services or hospitality.
Under IRC section 45 B, employers in the food and beverage industry may be entitled to a social security and Medicare taxes credit, if the employer meets the necessary criteria. To receive the credit, you must:
- Have employees who receive tips from customers for providing, delivering, or serving food and/or beverages for consumption.
- Pay or incur employer social security and Medicare taxes on these tips.
This credit only applies to tips received by food and beverage employees, not tipped employees in other industries.
Our tax accountants can provide your business with:
- CFO Services — You need a nightclub CFO who understands the specific issues of your industry. CFO services from Smart Services can manage your financial affairs, and give you the peace of mind you deserve.
- Payroll Services — Payroll processing means understanding a complex array of issues, from payroll taxes to wage garnishment to overtime and more. Smart Services can manage your bar or nightclub payroll with expertise.
- Bookkeeping Services — When you hire Smart Services to manage your bookkeeping services, you can spend your time managing your growth instead of paying bills, creating reports and more.
Contact Smart Services today to schedule your initial consultation where we’ll discuss how we can help your restaurant, bar, or nightclub.