Business Builders

Stay on top of all the trends and challenges facing your business today - including legal advice, ways to maximize profits, how to build a winning team, and much more. Industry-leading experts provide gold-standard education content that's practical and relevant to YOU!  

View archived Business Builder articles.

October 2017 Edition

Featured Speaker:
Karen Tenenbaum, Tenenbaum Law


Don’t Lose Your Restaurant Because of Unpaid Taxes: Three Things You Need to Know - Karen Tenenbaum of Tenenbaum Law

A recent article in the Albany Times Union noted the high number of restaurants that shut down every year for nonpayment of sales or withholding taxes. Based on an analysis of media coverage, restaurants seem to be seized more often than other types of businesses. This may be, in part, a result of the unique challenges of operating a restaurant. Many restaurateurs fall behind on their taxes due to the constant cash flow issues and low profit margins characteristic of the industry. However, if they fail to address their tax issues promptly, restaurant owners risk losing their businesses.

Here are a few key points restaurant owners must know:

1. Food and food products are subject to complex tax rules.
Generally, food and food products are exempt from sales tax under New York law (NY Tax Law §1115). However, the sales of food and food products prepared by restaurants and similar establishments are subject to sales tax in certain circumstances. In addition, issues can arise when restaurants offer patrons or employees food or drink “on the house.” Even when consumers or employees are not charged for food or drink, New York still subjects the provision of same is still subject to a “use tax.” The use tax is “imposed on the use of taxable items and services in New York when sales tax has not been paid.” As a result, a New York restaurant is responsible for the payment of tax even on food or drink provided gratis, by virtue of the fact that same is used or consumed within the state.
For more information, see the New York State Department of Taxation and Finance’s guidance on when sales by Restaurants, Taverns and similar establishments are taxable.
2. Keeping accurate and detailed records of sales is a must.
Recordkeeping is critically important for a restaurant. Poor records can make it difficult to challenge an audit and the combination of a sales tax audit and inadequate recordkeeping could result in serious financial consequences to both a restaurant and its owner.
New York State Tax Law sets forth a number of requirements relating to business records. The law provides that business records should be sequentially numbered and dated, that checks and cash register tapes must be kept for at least three years after the due date of the related return or the date the return is filed, whichever is later, and that records must have be sufficiently detailed and document the taxable (or non-taxable) nature of each item sold. It is also important to keep any and all records proving that the business has collected and paid the correct taxes due.
3. Consequences for failing to collect and/or remit sales tax are severe.
Penalties and interest as high as 14.5 percent may be imposed for failing to pay sales tax. A business may also have its Certificate of Authority revoked or face criminal prosecution for failure to pay. In some cases, business owners or other responsible persons can be held personally liable for the sales tax owed. The State may use any combination of enforcement methods, such as warrants, levies, income execution and seizures, to collect what is owed. New York also can suspend a taxpayer’s New York State Driver’s License if (1) a taxpayer owes $10,000 or more in taxes, penalties, or interest, and (2) no collection resolution is in place (such as an installment payment agreement, income execution or offer in compromise).
If you haven’t collected or paid sales tax, New York State does offer a relief in the form of the Voluntary Disclosure and Compliance Program. The State will not impose penalties or bring criminal charges against eligible taxpayers with a history of noncompliance who come forward and pay their outstanding tax liabilities. As an added incentive, qualified taxpayers are also eligible for a limited look-back period.
Restaurant owners should contact a tax professional to discuss compliance with sales tax rules and how to resolve a tax dispute.
Tenenbaum Law, P.C. in Melville, focuses on the resolution of IRS and NYS tax controversies. Visit our website at or call us at (631) 465-5000. Tenenbaum Law, P.C. is an allied member of the New York State Restaurant Association.






September 2017 Business Builder - JonRobert Tartaglione, Founder and CEO of The Humanitas Consultancy
September 2017 Business Builder - Will Harmon, Marketing Associate at
September 2017 Business Builder - Christina Nicholson, Owner of Media Maven
August 2017 Business Builder - What To Do on Social Media Before the Food Show to Grow Your Brand and Business
August 2017 Business Builder - How to Get More Positive Yelp Reviews for Your Restaurant
August 2017 Business Builder - Start Creating the Optimal Guest Experience of the Future, Now
July 2017 Business Builder - Adapting Your Restaurant for an AI- and Automation-Loving Society
June 2017 Business Builder - Farm to Table Can Mean the Water You Drink, Too
May 2017 Business Builder - Food Transparency in the Age of 'Alternate Facts' and 'Fake News'
May 2017 Business Builder - Restaurant Trends: What's Hot in 2017
April 2017 Business Builder - 10 Ways to Increase Your Odds of Getting Media Coverage
March 2017 Business Builder - Attract Millennials with a Seamless, Restaurant Technology Experience
February 2017 Business Builder - The Problems We Face Are Fixable When Tackled Correctly
January 2017 Business Builder - How to Grow in the New Economy
December 2016 Business Builder - 3 Tips for Businesses Looking to Brand Local
October 2016 Business Builder - Tips from the Real Life Olivia Pope
September 2016 Business Builder - 5 Ways Servers Can Create Better Experiences
August' 2016 Business Builder - The Five F's
July 2016 Business Builder - The Secret to Getting More Positive Yelp Reviews for Your Restaurant
June 2016 Business Builder - 6 Restaurant Systems to Use to Avoid Failure
May 2016 Business Builder - Take My Sage Advice: Count the Carrots
April 2016 Business Builder - How to Choose the Foodservice Software that's Right for You
March 2016 Business Builder - Are Restaurateurs Missing the Boat When it Comes to Accomodating Dietary Issues
February 2016 Business Builder: Is Negativity Poisoning Your Workplace
January 2016 Business Builder: Marketing Beer, Wine & Liquor at a Restaurant 
November 2015 Business Builder: Top 20 Drivers of Restaurant Loyalty
October 2015 Business Builder - It's In My Blood
September 2015 Business Builder: Stop the Bleeding Now
August 2015 Business Builder - LeaderCHOICES - Unlocking Your Leadership Potential
July 2015 Business Builder - The Big Money Maker: An Intro to Full-Service and Off-Premise Catering
June 2015 Business Builder - Managing Generational Conflict
May 2015 Business Builder - Top 5 Reasons Why Your Business Needs a Video
April 2015 Business Builder - How to Lead Your Brand Into Menu Labeling
March 2015 Business Builder - 5 Best Practices to Improve Morale in Your Restaurant
February 2015 Business Builder - Four Steps to Build Your Network to Increase Your Networth by Kathleen Wood
January 2015 Business Builder - Defining Your Restaurant's Customer Experience by Joel Cohen
November 2014 Business Builder - Gluten-Free Menus Can be a Challenge - Or Not
October 2014 Business Builder - Understanding How Far in Advance to Initiate the Lease Renewal Process
September 2014 Business Builder - The Key to Running a Profitable Restaurant by David Scott Peters
August 2014 Business Builder - Improve Your Menu Engineering by Mark Kelnhofer
July 2014 Business Builder - Restaurants that Cater - Set a Minimum to Make You Money by Sandy Korem
June 2014 Business Builder - 5 Leadership Traits Required for Growing Restaurant Business by Darren Denington