Seattle restaurant and cafe bookkeeping: records to keep before tax time

One meal can appear in several systems

A cafe sale can appear in the point-of-sale system, a card processor, a delivery platform and the bank. Those records may show different dates and amounts without any one of them being wrong. A settlement can arrive after the sale, combine several trading days or deduct charges before payment. The bookkeeping task is to explain the connection, not to choose whichever total is easiest to download.

Create a channel list: counter, online ordering, delivery marketplaces, catering and any other material activity. Record which system captures the sale, which company collects payment and which report explains the settlement. Save a sample of the reporting route for each channel. When a platform changes its report format, this map helps the owner notice what is missing before the year-end handoff.

Build a daily close that the next shift can understand

A practical daily close records sales by channel, refunds, voids, discounts, tax, tips, payment methods and cash movements. Explain unusual adjustments while the people who handled them are available. If cash is used for a business purchase, preserve the receipt and authorization instead of letting it become an unexplained shortage.

Keep the close simple enough to complete consistently. A manager should be able to identify the date, who reviewed the report and which differences remain unresolved. Avoid overwriting source reports to make the numbers match. Keep the original export and record adjustments in a separate review log so the explanation survives a staff change.

For a weekly review, compare the daily sales records with the settlements expected from each channel. Investigate missing payments, duplicated imports and refunds posted in a different period. The goal is a documented explanation of each difference, not a promise that every system will always show an identical total.

• A dated POS summary and payment-method breakdown.
• Refund, discount, void and adjustment detail.
• Cash count and any supported cash purchases or bank deposits.
• Expected settlements by processor or delivery channel.

Use a settlement bridge instead of treating deposits as sales

For a fictional example, a platform might show $1,000 of customer transactions while the business receives an $850 settlement after charges and adjustments. The $150 difference needs a breakdown; it should not simply disappear. The example does not say what is taxable or which business must remit tax. Those answers depend on the actual arrangement and reports.

Create a bridge showing the transaction total, each adjustment, the net settlement and the bank deposit reference. Preserve the platform’s tax and fee columns rather than collapsing them into one number. Where a marketplace says it handles a tax obligation, retain evidence of what it handled and ask how the restaurant must report the activity. Do not infer collection responsibility from the presence of a tax label alone.

Check food taxability before configuring the till

Washington distinguishes grocery-type food from prepared food and other taxable items. DOR’s restaurant guidance describes prepared food using factors such as heating, combining ingredients and providing utensils. The treatment of a product sold in a cafe cannot be decided only from the business name or whether a customer carries it out.

DOR also has a prepared-food percentage rule that can affect whether a seller may segregate food sales. A business that relies on that distinction needs the supporting product and sales information. Keep product descriptions, item categories and the reason for the chosen tax treatment available for review. Do not label every bakery item exempt, or every packaged item taxable, without checking the actual rule and facts.

• Washington DOR: Retail sales tax on prepared food
• Washington DOR: Prepared food sales above 75 percent

Keep voluntary tips and mandatory charges distinct

Washington’s restaurant rule distinguishes clearly voluntary gratuities from mandatory additions to the selling price. Mandatory amounts can be subject to retailing B&O and retail sales tax even when labelled a tip. Preserve the menu, receipt presentation and transaction details needed to understand what the customer was required to pay.

For operations, use separate reporting lines for voluntary tips, service charges, amounts paid to employees and any amount retained by the business. This helps a payroll reviewer see the flow without assuming the label establishes the legal treatment. Wage, disclosure and payroll rules require their own review; a sales-tax treatment does not resolve every employee-pay question.

When changing a service-charge policy, keep the effective date and a copy of the old and new customer-facing wording. Tell the person maintaining the books and the payroll provider before the first affected close. Otherwise, the same charge can be imported into one category for months after the actual policy has changed.

• Washington Legislature: WAC 458-20-124, restaurants and similar businesses

Review purchases, stock and equipment without losing the detail

Organize supplier bills by a small set of categories the owner actually uses: ingredients, beverages, packaging, cleaning, equipment and other operating costs. Keep the item detail where a purchase mixes categories. A supermarket or warehouse-store payment can include several kinds of spending, so the merchant name alone is an unreliable description.

For internal control, record stock counts on a repeatable date and note spoilage, staff meals or other material adjustments for review. These notes help explain why purchases and sales do not move together. Ask the preparer how inventory and related costs are handled for the business’s method rather than treating a purchase category as a final tax conclusion.

Keep equipment invoices and financing documents together. A new espresso machine or refrigeration unit should be identifiable after the payment has left the bank. The preparer may need cost, acquisition and disposal information to evaluate the treatment. Do not presume that paying for an asset means the full payment is a current operating deduction.

• IRS: What kind of records should I keep?

Give the preparer a clear handoff and retain the originals

At year-end, supply the channel map, reconciled reports, settlement bridges, payroll summaries and a list of open issues. Include copies of agency notices and prior returns. Identify a new location, ownership change, catering operation or additional sales channel. These facts are easier to assess when they are explicit instead of hidden in a miscellaneous-income account.

Washington DOR’s recordkeeping guidance calls for complete records for at least five years. Federal retention can differ with the record and circumstances, and asset-related documents may need longer retention. Choose a documented retention policy rather than deleting everything after one arbitrary period. Keep backups that can actually be opened if a platform account is later closed.

Selro is the cheapest way to get your business taxes done: US$399 a year covers everything tax for the year, including the federal business return, Washington excise and Seattle filings and the owner's return when the business income needs it. Bookkeeping is US$20 a month, and catch-up bookkeeping gets one flat quote. Bring the records above and our team takes it from there.

• Washington DOR: Record keeping requirements
• IRS: How long should I keep records?