Don’t Get Burned By The IRS – Tax Tips for Restaurant Owners

Operating a restaurant is not easy. By the time you manage inventory, staffing, customer demand and narrow profit margins, the last thing you want to think about is the IRS. Recordkeeping and tax deadlines may seem like a low priority item that can be pushed off to another day. However, neglecting these obligations can not only put your restaurant in jeopardy, but expose you to personal liability for certain unpaid taxes. 

Restaurants, like other cash-intensive businesses, are a frequently targeted for audits by the IRS. It is easy for the IRS to allege that a restaurant owner underreported the restaurant’s income, inflated the cost of goods sold or failed to properly report their employees’ tip income. By keeping accurate and complete records, you can reduce the length and pain of an audit.

Generally, the IRS has three years to audit a tax return, although in cases where gross income has been underreported by 25 percent or more, then the IRS has six years to audit. Once you are…