Prepared Food and Beverage Tax

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If you run a retail store, restaurant, or other business that sells prepared food or drinks — that is, prepared items sold at retail for consumption on or off the premises — your state may enforce a prepared food/beverage tax. Many states take 1% (or as much as 5%) of the sales of prepared food and beverages. The types of foods and beverages taxed include any and all edible refreshments or nourishment, liquid or otherwise including alcoholic beverages, except for snack foods.

Do You Qualify to Pay a Prepared Food/Beverage Tax?

Your state’s business licenses, permits & tax board decides the specifics on the types of businesses that have to pay this food tax, but in general, if you operate one of the following, you will need to pay it.

  • Dining Rooms
  • Eateries
  • Grills
  • Bowling Alleys
  • Coffee Shops
  • Drug Stores
  • Cafeterias
  • Lunch Wagons/Lunch Trucks
  • Cafes
  • Pushcarts
  • Ice Cream Stores
  • Movie Theaters
  • Festivals
  • Bed & Breakfast Inns
  • Private Clubs
  • Convenience Stores

You may also need to file certain business licenses, like a food establishment permit, before you start a business that will sell prepared foods. Find out from your business license bureau everything you need to know before starting a business that sells food.

Filling Out Your Prepared Food Tax Form

Each month, you will be required to file and pay your taxes. Your city may have an online system for filing your prepared food/beverage tax, or you may need to fill out a paper form and submit a check for 1% of your gross sales. You will be asked to fill out details about your business, as well as the gross receipts for all locations. Failure to pay the appropriate amount in taxes can put your business in jeopardy.

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