A restaurateur with a liquor license doesn’t sleep easy. The wine may complement the menu, and the cocktails may bring folks in the door. But, every cent a customer spends, an employee earns, or an owner invests is subject to audit. This is why its a great idea to have restaurant business loans ready when funds are needed quickly.
What You Need To Know About Comptroller Tax Audits
Comptrollers are state officers whose duties may vary slightly from state to state, but typically they collect state revenue, track expenditures, and monitor the financial condition of businesses owing revenue to the state.
According to Comptroller.Texas.Gov, for example, it’s their job “to determine if businesses have properly collected, reported and paid state taxes.”
They try to determine if taxes have been charged and paid correctly. It can be a negative experience for the restaurateur if the owner has been processing revenue and taxes incorrectly or illegally.
But, it can be positively informative if it reveals potential errors or inefficiencies.
What Auditors Need
Auditors love paper. They want to see journals and records, ad valorem and occupation tax records, bills and receipts, and payroll reports and taxes.
They may also want to access insurance, deeds, licenses, city and county tax records, and business policies and procedures. There are also point-of-sale records, equity obligations, debt vehicles, and more.
What Auditors Look For
Comptroller Tax audits follow a discipline that they must document and account for. But, it may still leave you wondering. But, there are red flags you want to avoid.
If your lifestyle is bigger than your storefront, you may be in trouble,
If the business handles a disproportionate volume in cash, it could mean you are laundering it or letting it slip under the tax table.
If you are writing off car, dining, travel, and entertaining expenses, you had better document the events, place, and people.
If you employ staff, you must pay them correctly, fairly, accurately, and timely. You also have to substantiate payment of tips and taxes.
If you pay for marketing, keep records of all advertising payments and services.
What They Look For In Alcohol Records
In most states the comptroller tax audits are connected with the state’s alcohol control commission. So, as long as hands touch alcohol, you need to maintain and provide adequate records.
For example, according to the Texas Comptroller’s office, “Texas imposes both a gross receipts tax and a sales tax on the amount received from the sale, preparation or service of mixed beverages and from the sale, preparation or service of ice or nonalcoholic beverages that are sold, prepared or served for the purpose of being mixed with an alcoholic beverage and consumed on the premises of the mixed beverage permittee.”
This rule, alone, applies to licensed owners of restaurants, bars, clubs, and lounges mixed drinks. It requires them to keep records on those alcoholic drink transactions in addition to routine sales taxed transactions.
What You Can Expect
Typically, an auditor will request something like a “desk audit” which requires you to provide documentation the office specifies. While it may seem demanding, the more ready you are able to meet the order in detail, the more likely you are to avoid or forestall a full blown audit.
Visits to observe bartender performance, investigations into point-of-sale records, checks on internal controls, and reconciliation of restaurant sales gross receipts and sales tax may all value.
If you want to rest easy and maybe even take a break from your alcohol-related business, you need to have a comptroller tax audit defense law firm on speed dial.