Restaurants & Food Service
Restaurant Accountant in Ottawa
Running a restaurant, cafe, or bar in Ottawa means thin margins, a lot of cash and card sales, a payroll full of tipped and part-time staff, and HST rules that change with what is on the plate. Nour & Daniels Tax works with food service owners across the city, from full-service kitchens and bars to cafes, caterers, and food trucks. We keep your tips and payroll correct, charge the right HST on the right items, keep your cash and point-of-sale records clean for the CRA, and make sure the deductions that come with a food business are not left behind.
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A Different Kind Of Books
Why a food business is its own animal
Few businesses are as tax-heavy at the counter as food service. Every sale carries an HST decision, every shift creates tips that have to be handled correctly, and a large share of revenue still comes through as cash. On top of that, margins are tight, so the difference between a clean set of books and a messy one is often the difference between a profitable year and a stressful one.
The CRA knows all of this, and food service is one of the sectors it watches most closely for unreported cash. We set your bookkeeping up so daily sales, tips, and supplier costs all tie out, which keeps the tax bill right and keeps you ready if the CRA ever asks questions.
Who We Help
Food businesses we work with across Ottawa
Restaurants and bars
Full-service kitchens, pubs, and bars, where dine-in sales, alcohol, and a large tipped staff all run through the books. We handle the payroll, the liquor and food HST, and the year-end so the corporation files clean. See corporate tax.
Cafes and quick-serve
Coffee shops, bakeries, and takeout counters live on high-volume, low-ticket sales, where Ontario's point-of-sale rebate on items sold for $4 or less changes what you actually charge. We make sure your POS is set up to collect the right amount on every cup and every combo.
Caterers and food trucks
Mobile and event-based food brings its own mix of invoiced jobs, cash markets, and travel and equipment costs. We sort out the HST on catering versus retail sales and capture the vehicle, fuel, and gear deductions that come with the work.
The Hard Parts
Tips, food HST, and cash, done right
Three things trip up more Ottawa food businesses than anything else. Here is how each one actually works.
Tips and gratuities
All tips are taxable income. How they are treated for payroll depends on the type. Controlled tips, where you pool, distribute, or add them to a bill, count as part of the employee's pay, so CPP and EI come off and they go on the T4. Direct tips handed straight from customer to server are not subject to CPP and EI at source, though the employee still reports them. Getting this split right keeps your payroll remittances correct.
HST on what you sell
Not all food is taxed the same way. Basic groceries are zero-rated, prepared meals are taxable at 13%, and in Ontario a point-of-sale rebate means qualifying prepared food and beverages sold for a total of $4 or less only carry the 5% federal part. Your menu and your POS settings have to match these rules, item by item.
Cash and point-of-sale records
Food service runs on cash and cards, and the CRA treats unreconciled cash as a red flag. We tie your POS daily reports to your deposits and your HST so the numbers hold together. Clean records are your best protection if the CRA ever runs an indirect check on your sales.
Alcohol, equipment, and the build-out
Alcohol sales are taxable and come with their own licensing and reporting. The kitchen build, the equipment, and leasehold improvements are capital costs claimed over time rather than all at once. We make sure the big spend on opening or renovating a space is deducted the right way.
| What you sell | HST you collect |
|---|---|
| Basic groceries (milk, bread, produce, uncooked staples) | 0% (zero-rated) |
| Qualifying prepared food or beverage sold for $4 or less | 5% (Ontario point-of-sale rebate removes the 8% provincial part) |
| Prepared meals and beverages over $4, and dine-in service | 13% |
| Alcoholic beverages | 13% |
A cafe sells a $3.50 latte. Because it is a prepared beverage at $4 or less, the customer is charged only the 5% federal part, so 18 cents of HST, not 46 cents. At lunch the same cafe sells a $16 dine-in plate, which is taxed at the full 13%. Tips left on the card terminal and paid out through payroll are controlled tips, so CPP and EI come off them and they appear on each server's T4.
Figures are illustrative and depend on the item and your setup. We confirm the treatment for your actual menu and POS.
What We Handle
Everything your restaurant's books need
Bookkeeping and HST
Daily sales, tips, supplier costs, and merchant fees reconciled, with your HST returns filed on time and the food rules applied correctly.
Payroll and tips
Payroll for tipped and part-time staff, with CPP, EI, and tip handling done right, and T4s issued by the end of February.
Corporate tax and owner pay
Your corporate return, plus the salary-versus-dividend plan that pays you with the least tax. Behind on filings? See back taxes.
What To Gather
Documents we usually need
For a food business, the daily numbers matter as much as the year-end statements. A good starting list:
- POS daily sales reports and Z-tapes for the period
- Merchant and card-processor statements
- Supplier and food-cost invoices
- Payroll records and your tip pool or distribution records
- Opening and closing inventory counts
- Your lease and any leasehold improvement costs
- Liquor licence and alcohol purchase records, if you serve
- Equipment purchases and financing for the build-out
Restaurant Questions
Common food service tax questions
How are my servers' tips taxed?
All tips are taxable income to the employee. The payroll treatment depends on the type. If you control the tips, by pooling them, distributing them, or adding a service charge to the bill, they count as part of the employee's pay, so you deduct CPP and EI and include them on the T4. Tips a customer hands directly to a server, with no involvement from you, are not subject to CPP and EI at source, though the server still has to report them as income. We set your payroll up so the right amounts come off and your remittances are correct.
Do I charge HST on all the food I sell?
No, and this is where a lot of food businesses get it wrong. Basic groceries, the uncooked staples you might sell at a deli or market, are zero-rated, so no HST. Prepared meals and dine-in service are taxable at 13%. The wrinkle in Ontario is the point-of-sale rebate on qualifying prepared food and beverages sold for a total of $4 or less, where only the 5% federal part is charged. We map your menu to these rules and make sure your POS collects the right amount.
We're a cafe selling items under $4. How does the Ontario rebate work?
Ontario gives a point-of-sale rebate of the 8% provincial part of the HST on qualifying prepared food and beverages sold for a total of $4 or less. In practice that means a coffee, muffin, or small combo at or under $4 is charged just the 5% federal part instead of the full 13%. You still report it properly on your HST return. We make sure your POS is programmed so the rebate is applied automatically and your filings line up with what you actually collected.
The CRA is asking about my cash sales. What do they look at?
Food service is a cash-heavy sector, so the CRA sometimes checks reported sales indirectly, for example by comparing your purchases, markups, and deposits against the sales you reported, or by looking at your POS records. The best defence is records that tie out: POS daily reports that match your bank deposits and your HST returns. We build your bookkeeping that way from the start, and if the CRA does come calling, see our back taxes help for getting everything current.
Should my restaurant be incorporated?
It depends on whether the business is keeping more than you need to live on. While a restaurant is reinvesting every dollar, the tax benefit of incorporating is small. Once it is consistently profitable and leaving money in the business, a corporation can lower the immediate tax and let you plan how you pay yourself. There are also liability and financing reasons that matter in food service. We look at your numbers and tell you straight whether it is worth it yet. See tax planning.
Do you work with food trucks and caterers?
Yes. Mobile food and catering are some of our favourite files because they mix invoiced jobs, event and market cash, and a lot of deductible costs like the vehicle, fuel, equipment, and commissary rent. The HST can differ between a catered event and a retail sale, and we make sure each is handled correctly while capturing every cost the business runs on.
Talk to an Ottawa restaurant accountant
Whether you are opening your first cafe, running a busy kitchen, or catching up on a stack of unfiled HST, tell us where things stand and we will find the simplest way forward. Reach out and we will take it from here.
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