Fort Lauderdale Bar Tax Lawyer Providing Legal Services for Bar & Restaurant Owners in Florida
Starting and running a successful bar and restaurant in Florida is not an easy task, especially when considering the many nuances of the tax laws that bar and restaurant owners are expected to comply with. Failing to collect or pay certain taxes, such as sales tax, can result in a major headache for business owners. Learn how bars and restaurants are taxed in Florida, and when working with a bar tax attorney may work in your favor.
What Kind of Taxes Do Bars and Restaurants Have to Pay in Florida?
All businesses are required to pay federal income taxes on any business and personal income, but there may be other taxes you need to be aware of. For example, if your bar has employees, you are likely collecting and paying payroll taxes for each one of them. If your employees receive tips from customers, you must report their credit tips and withhold the applicable tax on those tips, and the employees should report to you their cash tips for the same reason.
In addition, bars and restaurants need to pay special attention to Florida sales tax. The amount to be collected in sales tax varies depending on the county where the establishment is located. Sales tax rules in Florida can be complicated, and it may not always be clear to a bar and restaurant owner to understand what items should be taxed and what items are tax-free. It may be worth consulting with a Fort Lauderdale bar tax attorney to ensure you are dealing with sales tax correctly in your establishment.
How Does Sales Tax Work in Florida?
The state of Florida imposes a 6% sales tax for all restaurants. Depending on the city or county where the restaurant is located, there may be additional local sales taxes added to that 6%. Generally speaking, all food and beverage sold at a Florida restaurant are taxed, regardless of whether the food and drinks are consumed on the restaurant premises or taken “to go”.
In addition, many Florida bars offer live entertainment for patrons. If your bar customers must pay a cover charge to enter your establishment and enjoy the show, the price of the ticket is considered a taxable admission. It is also worth mentioning that the state of Florida is one of just a few states in the country that was still using the bracket system to calculate sales tax. However, recent changes in the law allow restaurant owners to adopt an algorithm method that is already widely used in other states.
What Happens if My Bar Didn’t Collect Sales Tax?
Bar and restaurant owners should consider training their staff to collect sales tax on every sale, and should also consider having adequate POS systems in place programmed to charge the right percentage of sales tax. That being said, while owners are allowed to pass the tax on to their customers, it is truly the responsibility of the restaurant to pay sales tax to the government.
This means that even if you failed to add sales tax to your customer’s checks, your bar is still responsible for paying sales tax. It is advisable to ensure you are collecting sales tax on all taxable items at your establishment so you don’t find yourself dealing with a large tax bill that could have easily been covered by your customers.
Can You Be Sent to Jail for Not Paying Sales Tax?
Two common sales tax problems bar and restaurant owners may end up dealing with are failure to collect sales taxes on taxable items and failure to remit collected sales taxes to the state of Florida. The first problem can be easily remedied with the help of a tax attorney, as there are many options to fix the situation, such as entering the Voluntary Disclosure program and negotiating a payment plan if necessary.
However, when you collect sales tax from your customers and fail to remit it to the government, things can get a little more complicated. The state of Florida understands that you are legally holding the money in trust and that the sales tax money you collected technically belongs to the state. But sometimes, your business may go through a slow period or a rough patch in which you don’t make a lot of profits, and after paying for all your expenses and doing payroll, you may find yourself without enough funds to cover sales tax.
Unfortunately, Florida laws are very strict about this situation, and business owners with just a few hundred dollars in taxes collected but not remitted could potentially find themselves dealing with criminal charges. Not remitting tax money that you collected from customers might be considered a third-degree felony, with significant consequences that could include a jail sentence of up to five years.
When Should You See a Bar Tax Attorney?
If you realized you have made a mistake in handling sales taxes for your bar or restaurant, or are worried about facing criminal charges for not remitting sales tax money to the government, your first step should be to speak to a Fort Lauderdale bar tax attorney. Taking action to remedy the situation sooner than later will only work in your favor, as tax-related problems tend to only get worse if you choose to ignore them.
Attorney Ray Haselman focuses on helping individuals and business owners solve their tax problems. The Law Office of Ray Haselman has assisted countless bar owners in Fort Lauderdale to stay compliant with all their tax obligations and obtain favorable outcomes for tax problems. Reach out to our office by calling 786-522-0410 to talk about your situation.