Restaurants and hospitality businesses move a high volume of small transactions every single day, and that volume is exactly what makes generic monthly bookkeeping habits fall short here.

Daily Cash and POS Reconciliation Isn't Optional

With this much daily transaction volume, reconciliation needs to happen daily, not at month-end. Match your POS system's Z-report totals against your bank deposits and cash drawer counts every single day. A shortfall is easy to trace the same day it happens — and nearly impossible to trace a month later.

Tips: Controlled vs. Direct — Who's Responsible

The CRA splits tips into two categories with different payroll implications. Controlled tips — where the business decides how tips are collected and distributed, like an automatic gratuity on large parties, a mandatory service charge, or a tip pool run through the business — are treated like wages, meaning the employer withholds CPP, EI, and income tax on them. Direct tips — cash handed straight to the server, or tips the employee controls and distributes themselves — aren't run through payroll, but the employee is still required to report them as income personally.

Card tips are worth a closer look before assuming they're direct. If a tip comes in electronically and sits with the business for any part of a shift before it's paid out, that can be enough for the CRA to treat it as controlled — even if you're not setting the amount or deciding how it's split. A 2022 Federal Court of Appeal decision confirmed this can apply to electronic tips specifically. If most of your tips move through your POS system before reaching staff, it's worth confirming with your accountant which side of the line you're actually on.

Getting this backwards is one of the most common payroll mistakes in the industry.

Food Cost and Inventory Shrinkage

Track food and beverage cost of goods sold separately from your other expenses, and count inventory on a regular cadence — not just once a year. Comparing your book inventory to a physical count on a regular schedule is how you catch shrinkage from waste, spoilage, or theft before it becomes a large, unexplained variance.

Most of What You Sell Is Fully Taxable

Unlike a grocery store, most restaurant food and beverage sales — dine-in, takeout, or delivered — are fully subject to GST/HST. The "basic groceries" exemption that applies to unprepared food at a grocery store doesn't carry over to prepared meals served or sold for immediate consumption.

Delivery Platforms Work Like Any Other Marketplace Fee

Uber Eats, DoorDash, and similar platforms take a commission off each order before paying you out. Record the full sale amount as revenue and the platform's commission as a separate expense — not just the net deposit that lands in your account.

What You Can Deduct

• Food and beverage inventory (COGS)
• POS system and payment processing fees
• Delivery platform commissions
• Uniforms, smallwares, and kitchen equipment
• Liquor licensing fees, where applicable
• Cleaning and sanitation supplies

FAQ

Do I need to track inventory daily? Not daily, but a regular cadence — weekly is common — with a full physical count at month-end catches shrinkage before it becomes a large, unexplained variance.

Are automatic gratuities on large parties treated differently than a tip jar? Yes. An automatic gratuity the business adds to the bill is a controlled tip and goes through payroll with normal withholdings. A tip jar or handed-over cash is a direct tip and doesn't.

Do delivery platform fees affect my GST/HST? You still charge GST/HST on the full sale to the customer; the platform's commission is a separate business expense, not a reduction of your taxable sale.

Tip categorization, food cost tracking, daily cash outs — Margot knows the rhythm restaurants actually run on. Ask Margot a question right now.