Tonight’s Special Is: Sales Tax A How-To Guide for Restaurant Owners

Before we get started, keep in mind that sales tax laws vary by state and municipality. While this guide serves as a general rule of thumb, be sure to check on the specific laws governing your area before making any changes to your restaurant’s operations or accounting.

Restaurant owners face many complicated rules and regulations when it comes to running their business, and sales tax is no exception. This simple guide is designed to help you understand how sales tax works and what you need to do to be prepared and stay compliant.

What is a sales tax?

Sales tax is a consumption tax imposed by Uncle Sam on the sale of goods and services. In other words, it’s a fee the government requires you to pay in order to sell your delicious food.

Sales tax is paid by your customers to you so that you can, in turn, pay this amount to the government every month or quarter. Unlike a federal tax, sales tax is a sort of “pass-through” from your customers to the government.

Does my restaurant have to pay sales tax?

You’re required to pay sales tax if your restaurant has what is known as a “nexus” in a given jurisdiction. So if your restaurant has a physical presence, like a brick-and-mortar location or a food truck, you will definitely be required to pay. If you have a food business that is strictly online, you may not have to but should double-check with your local jurisdiction. Having an employee, an affiliate, or some other type of presence may make you liable to pay.

So when do I pay sales tax exactly?

Think of it this way: your customer is the end-user of the food you sell – after it hits their stomach, it isn’t going anywhere else (sort of). But before it got there, you purchased ingredients from suppliers. The tax was not due at that time, because that was not the end of the food’s journey.

It may seem for a moment like you’re getting a break, but there’s no such thing as a free lunch. You don’t pay taxes on the purchase of food supplies because you will be collecting taxes on the final product. It is your responsibility to correctly calculate the amount of sales tax due by your customers (more on that later) – you’ll be required to pay it whether you remembered to collect it at the time of sale or not.

So it sounds like I’m probably required to pay sales tax…how do I do that?

  1. If you haven’t done so yet, you’ll want to file for a sales tax permit with your local agency. A quick search online should help you find those forms.
  2. Determine your sales tax rate – they vary by state and municipality.
  3. Distinguish between taxable and non-table items in your restaurant – certain carryout items may not be taxable. Be sure to check on the particular laws of your area.
  4. Set up sales tax in your POS – charging customers correctly means you won’t be liable for sales tax payments out of your own pocket

I’m already charging customers sales tax and have collected the funds. What do I do with them?

First, make sure you’ve collected the correct amount of sales tax – because if you don’t, the government sure will!

Tally up the sum total of all taxable items sold in your restaurant during the month.

Multiply that number by your sales tax rate.

For example, your tax rate is 5% and you sold $1,000 in total taxable meals and beverages, the sales taxes due that month is $50. 

The final step is to complete the sales tax forms for your state, due monthly, or quarterly at a minimum. Xendoo’s sales tax experts prepare and file your sales tax accurately and on time so you don’t have to (you probably have a lot on your plate as it is). They also give you plenty of advance notice to ensure you have the funds available for payment.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

5 Ways to Reduce eCommerce Shipping Costs

“Free shipping” — it’s what customers today expect to see when they shop online. So how can an eCommerce seller absorb those shipping costs without wreaking havoc on its profits? You could just raise your prices, but customers won’t like that either. Fortunately, you can change things about the way you ship to minimize the financial impact.

Decide how much you can absorb

You just may not be in a position to pay 100% of the shipping on every single order. But you could still favorably impress customers by offering it on orders over a certain dollar amount. Figure out what that amount is, taking into account average order value, surcharges for weight or size, and so on.

Downsize your packaging

Lose the habit of using the same size box for many different sizes of the product. Smaller boxes cost less to buy. Plus, many carriers calculate their shipping prices based on a combination of size and weight called “dimensional weight,” so a smaller box will cost less to ship even if it weighs the same as a bigger one. To make box selection easy, there is software that will do it for you based on each SKU’s measurements and weight.

Also, are you automatically using bubble wrap for every item, whether it needs it or not? Invest the time to analyze each SKU’s real protection needs, especially those that are already boxed by the manufacturer. Conversely, giving some products more protection can prevent damage in transit and reduce the number of returns.

Choose hybrid shipping options

In hybrid shipping, your carrier (such as FedEx) gets the package from you to its destination city, then hands it over to the U.S. Post Office for local delivery. This enables significant cost savings while keeping the customer happy with your speed and service.

Compare carriers

Look beyond UPS and FedEx. There are many other shipping services out there who can provide better prices and equal if not better service.

Automate shipping processes

Let shipping software save you time, manpower, and money in every step of the fulfillment process, from verifying address accuracy to printing labels to tracking deliveries.

These days, no eCommerce seller can afford to leave its shipping process on autopilot. Look for new solutions and strategies to minimize costs, and keep your net profits right where you want them.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

How Small Retailers Can Win Big Over Mega Stores

Cutthroat prices, huge inventory, massive advertising bucks — a small retailer is bound to feel like David going up against Goliath when competing with the big chains. But, like David, you can win the battle. The trick is to fight it on your ground, not theirs.

Leverage localness

We are located in South Florida and every winter we see our chain store branches offering cold-weather gear, even though it’s rarely needed in our climate. Large national chains are by their nature generic; it’s virtually impossible for them to offer any local flavor. You, on the other hand, can tailor your merchandise mix to the specific tastes and needs of the people in your area.

Stress quality and value

There’s no way you can beat the prices of your big-box competition. So go the opposite route and offer products that are made well and will serve a customer’s needs for years. They cost more but give greater value than an item that fails within a few months of purchase.

Promote uniqueness

Seek out products from smaller manufacturers that won’t be found in big box stores because they can’t meet such large orders. Customers love having alternatives to the mass-produced merchandise that’s the same from one chain to the next.

Help customers find you in local online searches

There’s no way you can top the search engine results page for nationwide searches. But you can use local SEO strategies successfully. They are actually weighted in your favor because Google will penalize any business that sets up multiple website pages for every one of its locations.

  • Create a Google Business page (or check the one you already have for completeness and accuracy)
  • Make sure your location appears on every page of your website
  • Direct inbound traffic from search engines to a location-centric landing page on your website (your address, phone number, store hours, location map)
  • Display links to other local businesses and organizations on your website

Connect with the community

Build customer awareness and loyalty by getting involved with them.

  • Host or participate in community events
  • Contribute to local charities
  • Sponsor a local sports team
  • Form strategic partnerships with complimentary local businesses
  • Invite local social media influencers to visit your store and sample your merchandise

Deliver superior customer service

You have the advantage of one-on-one relationships with your customers, which no big box store can equal. Provide a memorable experience by making them feel recognized, comfortable, and cared for where they shop.

Big stores will always be big players in the retail scene. But small retailers can reach local customers on a level above and beyond what national chains can do. Those are the ones that will survive and thrive.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.