Running your restaurant, especially these days, is enough work. When you decided to open a restaurant, you probably didn’t realize that you signed up to be a tax collector for your state. You need to understand your state and local tax rates to collect sales tax accurately on every transaction. Then you need to file and pay the state the sales tax you have collected multiple times a year. Managing restaurant sales tax can be complicated and time-consuming. Keeping track of sales tax funds you have collected is also a challenge for many business owners.
Mistakes are easy to make.
Deadlines can quickly be missed.
Costly fines can add up, and once you are behind, it is hard to get back on track.
Automating your sales tax using your POS can eliminate each step of this complicated process that eats up your time, adds stress to running your business and does nothing for your bottom line.
What is restaurant sales tax automation?
The most popular cloud POS systems likely offer integration with technology that enables you to automate every step of sales tax management – from calculating tax for each sale and setting the funds aside daily to preparing, filing and paying the tax owed to the state when due. DAVO by Avalara Sales Tax seamlessly integrates with the most popular POS systems to automate sales tax from start to finish. All you have to do is set up the service on your POS and DAVO takes it from there. Set up typically takes about 5 minutes, and you never need to worry about sales tax again.
Why you need daily sales tax set-asides when automating your sales tax
An essential part of dealing with restaurant sales tax is cash management: ensuring you have the correct funds set aside when it comes time to pay your sales tax. If you aren’t setting those funds aside on a daily basis, you run the risk of mistakenly spending the money and coming up short when it is time to pay.
DAVO uses data from your POS system to set aside the exact amount of sales tax you collect daily. The funds are transferred to a secure tax holding account. With this automated cash management in place, you can rest easy knowing that the funds are accounted for every single day.
The benefits of restaurant sales tax automation
When you reduce the need for manual management of a complicated business process like sales tax, you save a lot of time – something in very short supply for many busy restaurant owners. Beyond the significant benefit of time and resource savings, there are many other benefits of automating your restaurant’s sales tax:
- Eliminates missed payments and late payment penalties. Taxes are automatically filed and paid on time and in full, so you will never have to think about a payment deadline again.
- Ensures you automatically receive discounts where available. If you operate in one of the 26 states that offer on-time filing discounts, your discounts are automatically calculated, collected and refunded. *Note that restaurant sales tax by state varies – to find specific sales tax information for your state, click here.
- Set sales tax funds aside daily, ensuring you have the correct funds set aside when it comes time to pay.
- It completely removes the burden of restaurant sales tax from your plate, so you never have to worry about it again. More time to focus on food and grow your restaurant business!