Restaurants, cafés and takeaways
Accounting for Chicago Restaurants and Cafés
Sales tax monthly, tips reported, food cost tracked
What this business files
Form numbers and dates. A deadline landing on a weekend moves to the following Monday.
- Form ST-1Illinois sales and use tax on food, drink and merchandiseMonthly, by the 20th
- Chicago restaurant taxCity tax on prepared food and drink, filed with the Department of FinanceOn the city schedule set for your account
- Form 941Federal payroll tax on wages, tips and withholdingQuarterly, end of the month after the quarter
- Form 8027Annual report of tip income, for rooms with more than ten employeesFiled with the annual returns
- Form 1120-S or 1065The business return, depending on how the restaurant is set upMarch 15
Where owners lose money
We watch for these on every file in this trade.
- Delivery platforms report gross sales including their own fees, so the sales tax base looks larger than the money reaching the bank.
- Cash tips and card tips are treated differently for withholding, and getting the split wrong shows up in a payroll notice months later.
- Comped meals, staff meals and spoilage all move food cost, and none of them appear in the point of sale as a sale.
- A liquor licence, a food handler renewal and an amusement tax registration all sit outside the return schedule and still carry penalties.
Services this trade uses
One fixed monthly fee, agreed before the first month. Catch-up on prior periods is quoted once.
Restaurant or café
Common questions
How much sales tax does a Chicago restaurant charge?
A prepared meal in Chicago carries the state rate, the county and city portions, the transit authority portion, and the city restaurant tax on top. The combined figure moves when any one of those changes. We set the rates inside your point of sale and reconcile what the register collected against what the ST-1 reports.
Do I have to report cash tips?
Yes. Employees report tips to you, and you withhold on them and report them on the payroll returns. A room with more than ten employees also files Form 8027 each year and allocates tips when reported tips fall short of 8% of gross receipts.
My books are behind and I have a lease renewal coming. How fast is catch-up?
Most restaurants take two to four weeks for a full year of catch-up, faster when the point of sale exports cleanly. Landlords and lenders ask for two years of statements, so we rebuild both and reconcile them before anything goes out.
Should the restaurant be an S corporation?
Sometimes. An S corporation saves self-employment tax once profit is steady and large enough to carry a reasonable salary for the owner. Below that, the payroll and filing cost outweighs the saving. We run the numbers on your last full year before recommending a change.
Get your price this week
The first conversation is free. We read three months of statements, quote a flat figure and hold it. We reply the same working day.