Restaurant bookkeeping is the daily and monthly work of turning point-of-sale (POS) activity, cash drawers, and delivery-platform payouts into accurate books for a US restaurant: revenue recorded gross by location and channel, tips and sales tax held as liabilities rather than revenue, platform commissions and card fees booked as expenses, and food and beverage cost of goods sold (COGS) computed from inventory counts. It applies to single- and multi-location US operators. Two boundaries shape everything below: bank deposits are not sales, and tip and payroll rules are federal while sales tax rules are state law.
Quick answer
Run a daily close and a monthly close. Daily: bridge the POS end-of-day report to the bank — sales by channel, minus card fees and platform commissions — and confirm that expected deposits plus documented amounts in transit match what arrives. Monthly: count inventory and compute COGS from the roll-forward, reconcile payroll including reported tips, file sales tax from the liability account, and produce one profit and loss statement (P&L) per location. Tips the restaurant collects are never its revenue; they sit in a payable account until staff are paid through payroll.
For broader sector context, see our industry finance guides for small businesses. This page owns the restaurant close workflow; software selection is covered separately in our inventory management systems guide.
How should a restaurant set up its books?
Accounting basis. US Generally Accepted Accounting Principles (GAAP) accrual books — revenue when earned, costs matched to the period — are the only basis that produces meaningful daily food-cost and location comparisons. For federal tax, a business selling merchandise generally must keep an inventory and use an accrual method for purchases and sales, per IRS Publication 334; a “small business taxpayer” with average annual gross receipts up to $32 million over the prior three tax years (tax years beginning in 2026, per Rev. Proc. 2025-32) may use simplified inventory treatment. Book and tax treatment can differ; set the tax method with a tax professional.
Chart of accounts. At minimum: revenue by location and channel (dine-in, takeout, each platform), split food versus beverage; food and beverage COGS; expense accounts for platform commissions and card processing fees; liability accounts for sales tax payable and tips payable; and clearing accounts for the card processor and each platform. A clearing account that does not return to roughly zero after deposits post is the first error signal.
How does the daily sales-to-bank reconciliation work?
This is the core restaurant close workflow. Run it per location, per day, in this order:
- Pull the POS end-of-day summary (the Z-report): sales by category and channel, tax collected, tips by tender, refunds and comps.
- Split held-for-others money out of revenue: sales tax to sales tax payable; card tips to tips payable.
- Bridge each stream from gross to expected cash: card sales minus processor fees; platform sales minus commissions (weekly payouts sit in clearing until they arrive).
- Match bank deposits to the bridge within the settlement lag; remaining differences should be documented timing items.
- Log exceptions — over/short cash, chargebacks, voids — with a named reason.
The following is a hypothetical illustration with made-up inputs for one fictional location on Tuesday, August 4, 2026 — a book-accounting (management) view, not a tax calculation. The 25% platform commission matches DoorDash’s published Plus-plan delivery rate as of July 2026 (DoorDash merchant pricing, accessed July 27, 2026); the 8% sales tax rate and 3% card fee are invented.
Table 1: Daily sales-to-bank bridge for one hypothetical restaurant location (August 4, 2026, USD).
| Line | Dine-in (cards) | Cash | Delivery platform | Total |
|---|---|---|---|---|
| Food and beverage sales | $4,200.00 | $900.00 | $1,000.00 | $6,100.00 |
| Sales tax collected (8%, made-up) | $336.00 | $72.00 | $0.00 | $408.00 |
| Card tips collected | $600.00 | $0.00 | $0.00 | $600.00 |
| Platform commission (25%) | $0.00 | $0.00 | ($250.00) | ($250.00) |
| Card processing fee (3%, made-up) | ($154.08) | $0.00 | $0.00 | ($154.08) |
| Expected bank deposit / receivable | $4,981.92 | $972.00 | $750.00 | $6,703.92 |
Interpretation: each column foots — dine-in cards: $4,200 + $336 + $600 − $154.08 = $4,981.92, what should reach the bank within the processor’s settlement window — and the platform column is a receivable until the weekly payout. The platform collects and remits its own sales tax (8% × $1,000 = $80) as a marketplace provider, so that $80 never enters the bridge. The day’s books record revenue of $6,100.00, sales tax payable of $408.00, and tips payable of $582.00 — the $600 of card tips minus the 3% processing share of $18.00, a pass-through federal law permits when the processor charges a percentage on the sale (DOL Fact Sheet 15, accessed July 27, 2026). Commission expense is $250.00 and card-fee expense is $136.08 ($154.08 − $18.00). Cross-check: $6,100.00 − $386.08 total fees + $408.00 tax held + $582.00 tips held = $6,703.92, exactly the expected deposits. Cash tips paid out nightly never touch the bank, but employees must still report them for payroll withholding.
How do delivery platforms change the bookkeeping?
Delivery platforms act as marketplaces: they collect the customer’s payment, deduct commission, and pay the restaurant on a schedule — which is why the platform column above settles as a weekly receivable, not a daily deposit. As of July 2026, DoorDash publishes US commission rates of 15%, 25%, or 30% of the order subtotal for delivery depending on plan, and 6% for pickup orders (DoorDash merchant pricing, accessed July 27, 2026). Book commissions as an expense — never netted against revenue — or food-cost percentages and channel margins come out wrong.
Sales tax on platform orders is usually the platform’s obligation, not the restaurant’s, under state marketplace-provider laws. Texas, for example, states:
“Marketplace providers must collect and remit state and local sales and use tax on all third-party sales.” — Texas Comptroller of Public Accounts
(Texas marketplace provider guidance, accessed July 27, 2026).
How do tips and payroll work for a US restaurant?
Tips are the most regulated line in restaurant bookkeeping, and the rules in this section are federal.
Employee reporting drives payroll. The IRS requires tipped employees to keep a daily tip record and:
“Report all cash tips to the employer, unless the total is less than $20 per month from that employer.” — Internal Revenue Service
The report is due by the 10th of the following month (IRS tip recordkeeping and reporting, accessed July 27, 2026). The employer then withholds income tax and the employee share of Social Security and Medicare taxes on reported tips, pays the employer share, and reports and deposits those taxes with payroll (Form 941 quarterly), per the same IRS page. As of July 2026, employers must also separately report cash tips on Form W-2 (Box 12, code TP) with an occupation code — reporting that supports the employee-side “qualified tips” deduction, up to $25,000 per return for tax years 2025 through 2028, created by the 2025 law the IRS calls the Working Families Tax Cuts Act. The deduction belongs to the employee; the recordkeeping burden belongs to the employer.
Minimum wage and the tip credit. Under the Fair Labor Standards Act (FLSA), an employer may pay a tipped employee a cash wage as low as $2.13 per hour and claim a tip credit of up to $5.12 per hour against the $7.25 federal minimum wage — but only if tips plus cash wage reach $7.25 in every workweek, and only after notifying the employee (DOL Fact Sheet 15, accessed July 27, 2026). Many states require a higher cash wage or prohibit the tip credit, and the more protective rule applies. Managers and supervisors may not receive tip-pool money, and regardless of whether the employer takes a tip credit:
“the FLSA prohibits employers from keeping any portion of employees’ tips for any purpose, whether directly or through a tip pool.” — U.S. Department of Labor
Form 8027 for larger establishments. A “large food or beverage establishment” — in the 50 states or DC, serving food or beverages for on-premises consumption (other than fast food), with customary tipping, and normally more than 10 employees on a typical business day in the preceding year — files Form 8027 annually per establishment, per the IRS tip page cited above. If reported tips total less than 8% of gross receipts, the employer must allocate the difference to tipped employees (W-2 Box 8; no taxes withheld). Form 8027 is due on paper by the last day of February (March 2, 2026 for the 2025 form, since February 28 fell on a Saturday) and by March 31 when filed electronically, per the Instructions for Form 8027 (accessed July 27, 2026).
The Federal Insurance Contributions Act (FICA) tip credit partially reimburses the employer share. Under Internal Revenue Code section 45B, food and beverage employers may claim a credit for the 7.65% employer share of Social Security and Medicare taxes paid on tips above what brings a worker to the $7.25 minimum wage, claimed on Form 8846 (IRS FICA tip credit guidance, accessed July 27, 2026). Hypothetical illustration with made-up inputs: a server works 100 hours in a month at a $2.13 cash wage ($213.00) and reports $900.00 in tips. The minimum-wage basis is 100 × $7.25 = $725.00; tips not creditable are $725.00 − $213.00 = $512.00; creditable tips are $900.00 − $512.00 = $388.00; the credit is $388.00 × 7.65% = $29.68 for that employee for the month. The credit is computed per employee, so per-employee tip and hour records make it claimable; distributed service charges never qualify.
Service charges are not tips. A mandatory 18% large-party charge is employer gross income regardless of distribution, and wages when distributed, per the IRS tip page and Revenue Ruling 2012-18 — it belongs in revenue and payroll, never in tips payable.
How do you calculate food and beverage COGS?
COGS comes from the inventory roll-forward, never from what suppliers were paid this month:
COGS = beginning inventory + purchases − ending inventory (all at cost)
Hypothetical illustration with made-up inputs for August 2026: food inventory is $18,000.00 on August 1, purchases total $41,000.00, and the August 31 count is $14,050.00 — food COGS = $18,000 + $41,000 − $14,050 = $44,950.00, and $44,950 ÷ $145,000.00 of food revenue = a 31.0% food cost. Beverage: $6,000 + $9,300 − $5,500 = $9,800.00, and $9,800 ÷ $35,000.00 = 28.0%. Comparing theoretical usage (what recipes say should have been used) against the actual roll-forward flags waste and shrinkage. The systems that track counts and recipes are covered in our inventory management guide; the bookkeeping point is that no count means no reliable COGS.
What does a location-level P&L look like?
Multi-location operators need one P&L per site on the same chart of accounts, or comparisons are meaningless. Prime cost — total COGS plus total labor, a management metric — is the line that usually decides whether a location works.
Table 2: Two hypothetical restaurant locations, August 2026 (USD; percentages are shares of location revenue).
| Line | Location A (downtown) | % | Location B (suburb) | % |
|---|---|---|---|---|
| Food revenue | $145,000.00 | — | $98,000.00 | — |
| Beverage revenue | $35,000.00 | — | $22,000.00 | — |
| Total revenue | $180,000.00 | 100% | $120,000.00 | 100% |
| COGS (food + beverage) | $54,750.00 | 30.4% | $37,740.00 | 31.5% |
| Gross profit | $125,250.00 | 69.6% | $82,260.00 | 68.6% |
| Labor (wages, employer payroll taxes, benefits) | $61,200.00 | 34.0% | $39,600.00 | 33.0% |
| Prime cost (COGS + labor) | $115,950.00 | 64.4% | $77,340.00 | 64.5% |
| Occupancy and other overhead | $38,000.00 | 21.1% | $24,000.00 | 20.0% |
| Delivery platform commissions | $12,600.00 | 7.0% | $4,800.00 | 4.0% |
| Marketing | $5,400.00 | 3.0% | $3,600.00 | 3.0% |
| Operating profit | $8,050.00 | 4.5% | $10,260.00 | 8.6% |
Interpretation: Location B runs the worse COGS percentage (31.5% of revenue versus 30.4% at A) yet earns more than twice the operating profit, because delivery commissions take 7.0% of revenue at A against 4.0% at B and labor runs one point leaner. A channel-mix problem like that is invisible until revenue and commissions are split by channel and location — exactly what the daily workflow above produces. All figures are made-up inputs; compute your own from your books.
RFS implemented this kind of standardization for a multi-location restaurant group based in the United Arab Emirates (UAE) — categorizing revenue by location, reconciling vendor payments across high-volume sites, and automating invoicing, supplier payments, and payroll in FreshBooks, with administrative workload reported down 50% and clean statements that supported financing for new locations — documented in our restaurant chain case study. A UAE client under UAE rules: an example of the workflow, not a US compliance track record, and one client’s result is not a promised outcome.
How does sales tax work for a US restaurant?
There is no federal sales tax; every rule in this section is state law, and states differ on the details that matter most to restaurants. Two examples as of July 2026:
Texas taxes ready-to-eat food “even when it is sold ‘to go,’” per the Comptroller’s restaurant sales tax guide (accessed July 27, 2026), and treats gratuities separately:
“No tax is due on any voluntary gratuity that the customer pays in addition to the price of the meal.” — Texas Comptroller of Public Accounts
A mandatory gratuity of 20% or less is also exempt if separately labeled “tip” or “gratuity” and distributed to service employees; above 20% it is taxable (same guide).
California draws the line at optional versus mandatory: an optional tip is not taxable, while the California Department of Tax and Fee Administration’s (CDTFA) Publication 115 (accessed July 27, 2026) states of mandatory charges:
“A mandatory payment designated as a tip, gratuity, or service charge is included in taxable gross receipts …” — California Department of Tax and Fee Administration
So a mandatory 18% large-party service charge is taxable in California but generally exempt in Texas if structured as the Comptroller requires — the same charge, two states, opposite treatments. Configure the POS per state and confirm current rules with the state revenue department. On records, the IRS generally requires supporting documents for at least 3 years and employment tax records for at least 4 (IRS recordkeeping guidance, accessed July 27, 2026).
FAQs
Are tips restaurant revenue?
No. Tips are the employees’ income; card-collected tips sit in a tips-payable liability account until paid out through payroll or tip-out. Mandatory service charges are different: employer gross income, and wages when distributed.
Does my restaurant have to file Form 8027?
Only if it is a “large food or beverage establishment”: in the 50 states or DC, on-premises food or beverage service (fast food excluded), customary tipping, and normally more than 10 employees on a typical business day in the preceding year. Filers must also allocate tips when reported tips fall below 8% of gross receipts.
Is sales tax due on tips?
Voluntary tips are generally not taxable — Texas and California both exempt optional gratuities. Mandatory charges split by state: taxable in California; exempt in Texas at 20% or less if separately labeled and distributed to service employees. Confirm your state’s current rule before configuring the POS.
Can an employer take the $2.13 tip credit in every state?
No. The $2.13 cash wage and $5.12 maximum tip credit are the federal floor under the FLSA; many states set a higher cash wage or prohibit tip credits, and the rule more protective to the employee governs. Verify your state labor department’s current rate before setting up payroll.
When should a restaurant outsource its bookkeeping?
When the daily bridge does not tie to the bank, when a second location or third platform makes spreadsheets unreliable, or when tip reporting and Form 8027 exposure need consistent records. At that point, errors usually cost more than a monthly close run for you — see our remote bookkeeping services.
The bottom line
Restaurant bookkeeping is a daily discipline plus a monthly close: bridge POS sales to the bank every day, hold tips and sales tax as liabilities, book platform commissions and card fees as expenses, count inventory and roll COGS forward monthly, and produce one P&L per location so channel mix and prime cost are visible. Run the workflow in this guide for one full month and the deposits stop being a mystery. If you would rather have a team run it for you, scope your restaurant books with our remote bookkeeping services, and browse the Industry Finance Guides hub for related finance topics.
This article is general educational information, not tax, legal, accounting, or employment advice. Federal tip and payroll rules, state sales tax rules, and platform fee schedules change over time and apply differently to different facts; consult a qualified tax professional, your state revenue and labor departments, and an employment advisor before acting on any specific situation described here.