Accounting for Restaurants & Hospitality
Tip reporting, sales tax, cost controls, and tax strategy built for restaurants, bars, and hospitality businesses in Garden City, across Long Island, and the surrounding area.
Reviewed by James R. Hurley, CPA · June 2026
Thin margins demand sharp numbers.
Few businesses are as cash-intensive or as compliance-heavy as a restaurant. You are managing tipped employees, collecting sales tax the state treats as money held in trust, watching food and labor costs that can swing your profit in a single week, and doing it all on margins that leave no room for sloppy bookkeeping. A generic accountant who treats your restaurant like any other small business will miss the credits you are owed and the controls you need.
JRH & Associates works with restaurants, bars, caterers, and hospitality operators throughout Long Island and the tri-state area. We handle the tip reporting and the FICA tip credit that goes with it, keep your sales tax filings clean, integrate your point-of-sale data into books you can trust, and give you the food and labor cost reporting that lets you run the business on facts instead of guesswork.
Tip reporting and the FICA tip credit
Tips drive both a compliance burden and a tax opportunity. Employees must report tips, and you must report and withhold on them, including tip-outs to support staff and an annual reconciliation against gross receipts. Done correctly, accurate tip reporting also unlocks the FICA tip credit, which lets you recover a portion of the employer payroll taxes you pay on tips above the minimum-wage threshold. For a busy room that can be worth thousands of dollars a year, and we tie it directly to how we set up your payroll.
Sales tax compliance
In New York, prepared food and most restaurant sales are taxable, while certain packaged items, catering arrangements, delivery charges, and gratuities each follow their own rules. The state treats collected sales tax as trust money, so late or short remittance draws aggressive penalties. We prepare and file your returns on the correct schedule and make sure your menu is taxed properly at the point of sale, before an error compounds across thousands of tickets.
Cash controls
Cash, comps, voids, and discounts are where a restaurant quietly loses money. We help you put controls in place so that daily sales reconcile to deposits, voids and discounts are reviewed, and the gap between what the register rang and what hit the bank is closed. Strong cash controls protect you from both internal loss and the kind of unexplained discrepancies that invite scrutiny.
Food and labor cost margins
Food cost and labor cost are the heartbeat of the operation. We build reporting that tracks both as a percentage of sales every period, so you can see immediately when a vendor price increase, portion creep, or overstaffing starts eating your margin. The benchmarks vary by concept, but the discipline of watching the trend is what keeps a profitable restaurant profitable.
POS-to-books integration and payroll for tipped employees
Your point-of-sale system already captures sales, tips, voids, and discounts in detail. We integrate that data into your accounting so the books reconcile automatically and tip liability is tracked accurately, then run payroll for your tipped employees with the withholding and reporting the law requires. Clean integration means less manual entry, tighter controls, and numbers you can rely on. It also pairs naturally with our broader accounting and tax services.
"Most restaurant owners I meet are leaving the FICA tip credit on the table and losing money to weak cash controls at the same time. Fix the tip reporting and the point-of-sale integration, and you usually find real money in the first year, before we even talk about tax strategy."
James R. Hurley, CPA Founder & President, JRH & Associates Built for food and hospitality
Tip reporting & FICA tip credit
Compliant tip reporting that also recovers employer payroll tax through the credit.
Sales tax compliance
Accurate calculation, filing, and POS tax setup for New York and beyond.
Cash controls
Reconciliation of daily sales to deposits and review of voids and comps.
Food & labor cost reporting
Period tracking of your two most important margins as a percentage of sales.
POS-to-books integration
Point-of-sale data flowed into clean, reconciled accounting records.
Payroll for tipped employees
Withholding, reporting, and filings handled for your front and back of house.
Restaurant accounting FAQs
The FICA tip credit lets a restaurant recover a portion of the employer Social Security and Medicare taxes it pays on employee tips above the federal minimum-wage threshold. For a busy restaurant, that credit can be worth thousands of dollars a year that many operators leave on the table. Claiming it correctly depends on accurate tip reporting and clean payroll records, which is why we tie the credit directly to how we set up your books and payroll.
Employees are required to report tips to you, and you are required to report and withhold on them. That includes both directly tipped staff and tip-outs to support roles, plus an annual reconciliation when reported tips fall short of a percentage of gross receipts. Getting this right protects you in an audit and is also the foundation for claiming the FICA tip credit. We set up reporting procedures that match how your floor actually runs.
Prepared food and most restaurant sales are taxable in New York, while some grocery-style and packaged items may not be, and catering, delivery charges, and gratuities each have their own rules. Filing frequency depends on your volume, and the penalties for collecting tax and remitting it late are steep because the state treats it as money held in trust. We prepare and file your sales tax returns and make sure your point-of-sale system is taxing items correctly at the source.
Food cost and labor cost are the two numbers that make or break a restaurant. Many operators target food cost in the high twenties to low thirties as a percentage of sales and labor in a similar range, though the right benchmarks vary by concept and service model. The point is not a single magic number but tracking the trend every period so you catch waste, theft, or menu mispricing before it erodes a thin margin. We build reporting that surfaces these ratios on a regular basis.
Yes. Modern point-of-sale systems capture sales, tips, voids, and discounts in detail, and we integrate that data into your books so daily sales reconcile to deposits and tip liability is tracked accurately. Clean POS-to-books integration reduces manual entry, tightens cash controls, and gives you food and labor cost numbers you can actually trust when you make pricing and staffing decisions.
Let us tighten the numbers behind your restaurant.
Your first consultation is free. We will look at your tip reporting, your sales tax, and your cost margins, then show you where the money is going.