Restaurant tax preparation goes faster and produces a more accurate return when the source records are in order before you start. Here’s what to pull together.

Reconciled books for the full year. Every bank account, credit card, and merchant processor reconciled through December. If the books aren’t reconciled, the tax return is built on numbers that may not match reality. This is the foundation, and it needs to be done before anything else makes sense.

POS annual reports. Pull the year-end summary from your point-of-sale showing gross sales, comps, voids, discounts, sales tax collected, and tips reported. The gross sales number on the POS should tie to revenue in your books. If it doesn’t, that gap needs to be explained before filing. Tip totals also feed payroll reporting and the FICA tip credit calculation.

Payroll and tip reports. Year-end payroll summaries, all four quarterly 941s, the annual 940, W-2s and W-3, and state withholding reports. Tip reports matter for restaurants specifically because reported tips affect both payroll taxes and the tip credit you may be eligible to claim on the business return. If you allocate tips or have tipped employees under the federal minimum, those details need to be documented.

1099s for contractors. Musicians, repair technicians, cleaning services, marketing help, anyone you paid $600 or more during the year who isn’t an employee or a corporation. These should already be issued by January 31, but the supporting list of payments and W-9s on file should be available for the tax preparer to review.

Sales tax returns for all filing periods. Monthly or quarterly North Carolina sales and use tax returns, including any local taxes. Sales tax collected isn’t income, and sales tax paid isn’t an expense, but the filings confirm the numbers tie out and flag any periods that were missed.

Year-end inventory counts. Food, beverage, alcohol, and supplies counted as of December 31 with dollar values. Inventory directly affects cost of goods sold, which directly affects taxable income. A guess here can swing the tax bill significantly. If you don’t already do a physical count at year end, this is the year to start.

Fixed asset and equipment records. Any equipment, furniture, smallwares, or leasehold improvements purchased during the year with invoices and dates placed in service. Also note anything you got rid of, whether sold, traded, or thrown out. Depreciation and Section 179 decisions depend on this information.

Loan and lease statements. Year-end statements for every business loan and equipment lease showing principal balance and total interest paid. The interest is deductible. The principal is not. Without the statement, that split has to be estimated, which usually means leaving deductions on the table or overstating them.

A few extras worth gathering: health insurance premiums paid for owners and employees, retirement plan contributions, business mileage logs for any personal vehicle used, and documentation of any owner draws or contributions during the year.

Gina spent years as CFO of a local restaurant chain before founding GMJ, so the restaurant accounting side is familiar territory. Restaurants have moving parts that other businesses don’t, and missing a piece of documentation can mean a higher tax bill or a return that won’t hold up under scrutiny.

If your books aren’t current or you’re not sure what you’re missing, getting reconciled and organized takes priority over filing quickly. An extension is better than a wrong return. For small business accounting, bookkeeping and tax services in Jacksonville, NC, the goal is records that are tax-ready year-round, not a scramble every March.