Restaurant Accounting in Florida: A Comprehensive Guide for Small Businesses & Fine Dining

Florida’s restaurant scene is booming, with over 48,000 restaurants statewide benefiting from a thriving tourism industry and a mix of casual and fine dining options (pos.toasttab.com). Yet, running a restaurant in the Sunshine State, whether it’s a cozy beachside café or an upscale fine dining establishment, comes with unique financial challenges.

In fact, roughly 60% of restaurants fail in their first year (thecloudcpa.net), often due not to a lack of passion, but to financial pitfalls and poor accounting practices.

This guide on restaurant accounting in Florida will help you avoid those pitfalls by covering essential accounting methods, Florida-specific tax obligations, Xero integration, and popular POS systems (Square, Toast, Clover, Lightspeed, etc.) that can streamline your processes. Let’s dive in.

Cash vs. Accrual Accounting: Choosing the Right Method

One of the first decisions for any restaurant owner is whether to use cash or accrual accounting. Each method has its pros and cons, and the right choice depends on your restaurant’s size and complexity:

Cash Basis Accounting: Under cash-basis accounting, you record income when cash is received (e.g. when a customer pays a bill) and record expenses when you actually pay them. This method is simple and offers a clear view of your cash flow; you always know how much money is in the bank. Many small restaurants start with cash accounting because it’s straightforward. If there’s money in the register or account, you’re in good shape. This simplicity can be useful for small Florida eateries managing tight daily cash flows. Cash accounting also has tax advantages for small businesses: you typically don’t pay tax on income until you actually receive it, which can help when margins are thin.
Accrual Basis Accounting: Accrual accounting records revenue when it is earned and expenses when they are incurred, regardless of when cash changes hands. For example, if your fine dining restaurant caters an event and invoices the client, accrual accounting counts that as revenue now (when earned), even if the cash comes in later. Similarly, expenses are recorded when you receive goods or services (like a food shipment), not just when you pay the bill. Accrual gives a more accurate picture of profitability because it matches income with related expenses. Growing restaurants or those with inventory (which includes essentially all restaurants) often benefit from accrual accounting because it shows true margins on each period’s sales. In fact, the IRS generally requires accrual accounting once businesses exceed $25 million in annual revenue, or carry significant inventories, but most small restaurants in Florida will be below that threshold and can choose either method.

Which to choose? Many small Florida restaurant owners opt for the cash method initially. It’s easy to manage and great for monitoring cash on hand to avoid overdrafts. However, as your restaurant scales (say you open a second location in Miami or start offering catering with deposits and final payments due later), accrual accounting may serve you better. Accrual method is crucial for matching revenues and expenses in the same period, giving you insights like whether your menu pricing is truly covering food and labor costs. Remember, you don’t necessarily have to go it alone: modern bookkeeping software (like Xero or QuickBooks) makes accrual much easier to handle even for non-accountants, and a seasoned restaurant CPA can help you implement the right method or even a hybrid approach. The key is to choose a method that accurately reflects your restaurant’s financial health and supports informed decision-making.

Florida Sales Tax, Payroll Tax, and Local Surtaxes

Staying compliant with tax obligations is a major part of restaurant accounting, and Florida has its own specific requirements that every restaurant owner must understand. Here are the Florida tax issues you need to focus on:

Sales Tax on Meals: In Florida, sales tax is 6% statewide on the sale of food and beverages at restaurants, plus any applicable local discretionary sales surtax (which varies by county) (floridarevenue.com). This means if your restaurant is in a county with a 1% surtax, you should be charging 7% sales tax on each customer’s bill. All meals, drinks, and prepared foods sold for immediate consumption are taxable, whether dine-in or takeout (Florida does not exempt restaurant food from tax like groceries). As a restaurant owner, you must collect the right amount of sales tax and remit it to the Florida Department of Revenue, typically on a monthly or quarterly basis depending on your sales volume. Make sure your POS system is set up with the correct tax rate for your location (and updates if the county surtax changes). Davo by Avalara (https://www.davosalestax.com/) is great for sales tax automation. Failing to properly collect and remit sales tax can lead to hefty penalties and interest, something that can shutter a small business. It’s wise to set aside the sales tax you collect in a separate account so you’re not tempted to dip into it; remember, sales tax money isn’t yours, you’re holding it in trust for the state until you file your return.
Local Surtaxes: Florida’s discretionary sales surtax is an additional tax imposed by counties, usually ranging from 0.5% to 2% added on top of the state rate. For example, restaurants in Miami-Dade County currently add a 1% surtax (for a total of 7% tax on meals), while a restaurant in Orlando (Orange County) may have a different rate. These surtaxes often fund local projects (schools, roads, etc.), but for you as a business owner, the key is knowing the rate and the cap. Florida surtax typically applies only to the first $5,000 of a large sale, but in a restaurant context individual sales are usually below that cap so essentially all sales are taxed. If you operate multiple locations across different Florida counties, you’ll need to charge the correct rate at each location and file returns that account for each county’s collections. The Florida DOR provides rate tables yearly – ensure you keep updated. Accurate recording of sales by location will simplify this process.
Payroll Taxes: While Florida is famous for no state personal income tax (a relief for your employees and you as an owner on your earnings), you still have significant payroll tax responsibilities. Federal payroll taxes must be withheld from employees’ wages (income tax withholding, plus FICA taxes for Social Security and Medicare), and as the employer you must remit those along with the employer’s share of FICA. Florida does not have state income tax withholding, which simplifies payroll a bit, but it doesn’t mean Florida is tax-free. Florida employers must pay the Florida Reemployment Tax, the state’s unemployment insurance tax. This tax (also called SUTA – State Unemployment Tax Act tax) is due on the first $7,000 of each employee’s wages, and new restaurants start at a modest rate (often around 2.7% for new employers). You’ll file and pay this tax quarterly to the state. Additionally, you need to pay Federal Unemployment Tax (FUTA) on the first $7,000 of wages, minus credits for Florida’s reemployment tax paid. Staying on top of payroll tax deposits and filings is crucial; late or missed payroll tax payments can result in severe IRS penalties. Ensure that tips are being properly accounted for in payroll: in Florida, tipped employees must still earn at least the state’s minimum wage (which increases annually), so you may need to make up the difference if tips don’t bring them up to the full minimum wage. Proper tip reporting and making sure you claim the FICA tip credit (a federal tax credit for employer social security taxes paid on reported tips) are important parts of restaurant payroll management.
Other Taxes: Depending on your restaurant, there may be additional taxes to consider. For example, if you sell alcoholic beverages, you’ll pay excise taxes (usually built into the price from your distributor, but keep records). If your restaurant owns property (land or building in Florida), budget for annual property taxes which can be significant in Florida’s urban areas. Florida also has specific taxes like a tangible personal property tax on business assets in some counties (filed as part of property tax). While these aren’t daily operational taxes, they require yearly attention. And even though Florida has no personal income tax, C-corporations in Florida are subject to a state corporate income tax (currently around 5.5% of taxable income, though rates can change). Many small restaurants operate as S-corporations or LLCs to avoid that corporate tax and have income pass through to owners (taking advantage of Florida’s no personal tax). Consult with a CPA about the best entity choice for tax purposes if you’re just starting out or if you’re considering restructuring. A quick conversation could reveal opportunities to save on taxes both for the business and for you as the owner. (For more guidance on handling filings for both your restaurant business and your personal taxes as the owner, see our detailed guide on filing taxes for both the business and owner.)

Leveraging Technology: Xero & Restaurant POS Systems

Every restaurant, no matter how small, can now use powerful technology to take the headache out of accounting and bookkeeping in today’s digital age. Cloud software affords huge efficiencies by automating many bookkeeping tasks, minimizing errors, and providing immediate insight into your restaurant’s performance. Here are some tech tips for Florida restaurants:

Cloud Accounting Software (Xero): A modern cloud-based accounting platform like Xero is a game-changer for restaurant accounting. By using Xero, you can access your books from anywhere. Whether you’re at your restaurant in Tampa or on a brief vacation in the Keys, multiple users can log in simultaneously, such as your manager, bookkeeper, and CPA. Transactions from your bank and credit cards can be imported automatically into Xero every day. This will make bank reconciliation a lot easier. You can also set up rules to auto-categorize your repeating transactions. For restaurants, immediate Xero dashboards let you view your cash position and cash flow at once. That’s extremely helpful in a fast-paced business where yesterday’s deposit and today’s payroll run determine if you need to move funds. Xero also has an excellent mobile application. You can now take photographs of receipts and upload them. No more shoeboxes of receipts! Importantly, Xero integrates with many POS systems and other restaurant apps.
Restaurant POS Systems: Your point-of-sale system isn’t just for swiping credit cards and printing orders, it holds massive amounts of data for your accounting. Top restaurant POS systems in 2025 include Square, Toast, Clover, Lightspeed, among others. These systems track your sales by category, payment method, time of day, and more. Many Florida restaurant owners choose Toast or Square because of their robust features and ease of use for staff, while others might use Clover or Lightspeed for specific needs (Lightspeed, for example, is known for strong inventory features). Whichever POS you use, make sure you’re leveraging its reporting: daily sales summaries, product mix reports (to see what menu items drive your revenue), and even labor reports if your staff clocks in/out through the POS. Most modern POS systems can integrate with accounting software. For example, you can connect Square or Toast to Xero via an add-on or API integration, so that daily sales totals (and even transactional details) automatically flow into your accounting records. This keeps you from the task of manually entering all those sales, reducing mistakes at the same time. Integration means your sales, tips, and sometimes even sales tax collected can sync to Xero daily. Some POS systems also handle sales tax reporting by providing a breakdown of taxable sales, useful for preparing those Florida sales tax returns.
Payroll and Scheduling Tools: Labor is one of your biggest expenses, and technology can help you manage that expense. Consider using a payroll service or software—such as Gusto, ADP, or Xero’s payroll, if available—that automates tax withholdings and filings on your behalf. Often, these integrate with time-clock or scheduling software. Florida does not require separate state income tax filings, simplifying things, but a good payroll system will make sure your federal filings and state unemployment reports are on track. Scheduling software, such as 7shifts or Homebase, can integrate with payroll and POS to prevent labor overspending—for example, flagging if you’re about to hit overtime for a worker. Use technology to optimize your staffing relative to restaurant traffic, which could be as simple as cutting staff early on a rainy off-season night in Florida when business is slow. That can save a lot on labor costs.
Inventory Management Apps: If your POS doesn’t fully handle inventory, look into inventory management tools (like BevSpot for bars or Margin Edge for restaurants) that can integrate with your accounting. These tools help track usage, monitor food costs in real time, and even assist with ordering by forecasting based on sales. They can alert you to variances (e.g., if actual usage of an item far exceeds theoretical usage based on sales, indicating waste or theft). Keeping a tight control on inventory not only reduces food cost but also means your financial statements will accurately reflect the cost of goods sold each period.

Technology integration can turn what used to be hours of bookkeeping work into an automated flow of data. By connecting your POS, accounting software (like Xero), and other systems, you ensure consistency across platforms and get insights faster. Plus, cloud-based tools add flexibility, something especially helpful if you, as an owner, split time between the kitchen, dining room, and maybe multiple restaurant locations. It’s worth the upfront effort to set these systems up; consider consulting an accountant or tech specialist who has experience with restaurant software to get the optimal setup for your needs.

Tax Planning for Restaurants in Florida

Operating a restaurant in Florida is not just about service today but planning for tomorrow’s obligations. Tax planning for restaurants in Florida is one important exercise that saves you money and stress in the long run. Unlike just filing taxes, which is reporting history, tax planning is proactive and future-focused. Here are key tax planning considerations for Florida restaurant owners:

Estimated Taxes and Avoiding Surprises: Restaurants often operate on thin margins and fluctuating income, which can make cash flow unpredictable. Don’t get caught off guard at tax time with a huge bill. If your restaurant is profitable, you likely need to pay quarterly estimated taxes (for federal income tax, and for Florida corporate tax if applicable). Florida doesn’t have personal state tax, which simplifies estimates for owners of pass-through entities (you’ll focus on federal estimates), but if you’re a C-Corp, budget for Florida corporate tax too. Mark your calendar for IRS estimate due dates (April 15, June 15, Sept 15, Jan 15) and Florida’s corporate estimate dates, and consider setting aside a portion of profits each month in a tax savings account. For many small businesses, a safe rule is setting aside 25–30% of net income for taxes, but your CPA can help tailor this percentage. The goal is to avoid underpayment penalties and the cash crunch that comes from a surprise tax bill.
Taking Advantage of Tax Credits and Deductions: There are a few tax breaks especially relevant to restaurants. At the federal level, one big one is the FICA Tip Credit (also known as the 45B credit), which allows you to get a credit on your income taxes for the employer FICA taxes you pay on your employees’ tip income. In essence, since tips often push servers’ wages above minimum wage, the IRS rewards you for still paying the 7.65% Social Security/Medicare tax on those tips. Make sure you or your accountant are calculating and claiming this credit – it can save thousands for mid-sized restaurants. Another area is depreciation: restaurants have a lot of equipment and fixtures. Under current tax laws, you can often use accelerated depreciation or Section 179 expensing to write off new equipment (ovens, refrigerators, restaurant furniture) in the year of purchase. Florida follows most federal depreciation rules for corporate tax, but since many small restaurants in Florida are pass-through entities, it flows to the federal return primarily. Keep a fixed asset schedule and review it annually to plan asset purchases in tax-efficient ways (for example, if you had a very profitable year, investing in new equipment before year-end could provide additional deductions to offset income).
Business Structure and State Taxes: As mentioned, Florida has no personal income tax, which is a big incentive for many business owners. Ensure your business structure is optimized for this. Many Florida restaurant owners choose an S-Corp structure so that profits pass through to them without a corporate tax, and they only pay federal taxes on that income (and self-employment taxes on salary, etc.). In an S-Corp, you can also take a reasonable salary (which is subject to payroll taxes) and then take additional profit as distributions not subject to payroll tax – this must be done carefully and with IRS guidelines, but it’s a common tax planning strategy to minimize overall tax. If you’re structured as a C-Corp, consider whether S-Corp or LLC status might reduce taxes, or vice versa if you plan to retain earnings for expansion (C-Corp might work if you’re okay paying Florida corporate tax but want to potentially qualify for certain small business stock exclusions down the road). Major changes like these should be discussed with a CPA or tax advisor who understands both federal and Florida laws. Our firm specializes in this kind of strategic planning, see our dedicated page on restaurant tax planning for more insights on how proactive tax strategy can benefit your restaurant.
State and Local Tax Nuances: Even without a state income tax, Florida has some tax nuances to plan for. One is the sales tax audit risk. Florida knows restaurants handle a lot of cash and tips, so they are not shy about auditing sales tax or tip compliance. Good records (as we emphasized in bookkeeping practices) are your best defense. Another nuance: some Florida counties have a food and beverage “venue” tax or local tourism taxes if you’re in certain districts (for example, some jurisdictions have additional taxes on alcoholic drinks or meals to fund tourism marketing or infrastructure). Miami Beach at one point had a food and beverage tax for certain areas. Check with local city regulations or a CPA to see if any such local assessments apply to your restaurant, especially if you’re in a tourist-heavy location. If you know them in advance, you can incorporate them into your pricing strategy (no one likes surprise extra costs that aren’t accounted for in menu prices).
Succession and Long-Term Planning: It might seem far off, but consider your long-term plan. Do you want to expand your fine dining restaurant to other Florida cities? Or perhaps eventually sell your small restaurant when you retire? Tax planning plays a role here too. Florida doesn’t have a state capital gains tax (again, no personal income tax), which is great when selling a business, but federal taxes will apply. Structuring the sale properly (asset sale vs stock sale, allocating to goodwill vs equipment) can impact your tax hit. If expansion is on the horizon, plan for how that affects your taxes – multi-location operations might cross state lines (e.g., a second restaurant in Georgia would introduce state tax there) or at least cross county lines (affecting surtax and requiring separate county-level reporting for sales tax).

The bottom line is, proactive tax planning for your Florida restaurant ensures that you keep more of your hard-earned money and avoid costly mistakes. It’s about strategizing throughout the year, not just scrambling in March or April. Whether it’s timing when you make big purchases, optimizing how you compensate yourself as an owner, or staying ahead of regulatory changes, a bit of planning goes a long way. Many restaurant owners in Florida work with a CPA or tax advisor year-round for this reason. After all, you’d rather pour your energy (and money) into providing a great dining experience than into unnecessary tax payments or penalties.

(For more in-depth strategies and personalized guidance, check out our article on restaurant tax planning or consider scheduling a planning session with our restaurant-specific CPA.)

Putting It All Together

Thriving in Florida’s competitive restaurant industry isn’t just about delicious food and great service; it also requires keeping your financial house in order. Restaurant accounting in Florida involves navigating unique challenges like state sales tax and county surtaxes, handling tip income and payroll in a state with no personal income tax, and adapting to seasonal fluctuations in tourism. By understanding the differences between cash and accrual accounting, staying compliant with Florida’s tax laws, and implementing smart bookkeeping practices, you set your restaurant up for long-term success.

Equally important is leveraging modern tools like Xero and integrated POS systems to save time and improve accuracy. When your accounting system runs like a well-oiled machine, you gain clearer insights into your operations, empowering you to make data-driven decisions, whether that’s adjusting your menu pricing, controlling costs, or planning an expansion to the next city.

Above all, remember that you don’t have to do it alone. Many successful small restaurants and fine dining establishments partner with experienced CPAs who specialize in hospitality. The right advisor can help with everything from filing taxes for both the business and the owner to devising savvy tax-saving strategies tailored to Florida’s laws. With the information and best practices outlined in this guide, you’re better equipped to manage your Florida restaurant bookkeeping and accounting like a pro, giving you more time to focus on what you do best: delighting your guests and growing your restaurant’s reputation. Here’s to your financial success and a thriving restaurant business in the Sunshine State!