Accounting & Tax Services for Restaurants & Hospitality in Canada

Restaurants are accounting-intensive

Restaurants combine high transaction volume, thin margins, complex labour scheduling, perishable inventory, tip reporting, frequent ROE issuance for departing staff, alcohol licensing (AGCO in Ontario, AGLC in Alberta, LCRB in BC, RACJ in Quebec, etc.), and GST/HST treatment that varies by province and food category. Most restaurant accounting problems come from generic bookkeeping that does not understand the industry: under-coded sales tax, missing tip reporting, inadequate cost-of-goods-sold tracking, or payroll that misses provincial tip-related rules.

Who we serve

• Independent restaurants (full-service, quick-service, casual dining)
• Bars and pubs
• Cafés and coffee shops
• Food trucks and mobile food vendors
• Catering businesses
• Ghost kitchens and delivery-only operations
• Banquet halls and event venues
• Small restaurant groups and franchises

Tip reporting — the most common audit issue

CRA distinguishes between three types of tip income:

• Direct tips. A customer pays a tip directly to a server in cash or via a payment terminal that gives the tip directly to the server. Direct tips are the server's personal responsibility to declare on their T1.
• Controlled tips. The employer collects and distributes tips (e.g., pooled tips, automatic gratuities on large parties, tips paid by credit card and held by the employer). Controlled tips are wages subject to source deductions (CPP, EI, income tax) and must be included on T4s.
• Declared tips. Tips reported by the employee to the employer for inclusion in T4 income.

Mishandling controlled tips is a frequent CRA audit finding. Pooled tips that pass through the employer are nearly always controlled tips and must be subject to source deductions. We set up payroll structures that handle tip allocation correctly.

GST/HST on food and beverages

GST/HST treatment of restaurant food is governed by detailed rules that distinguish prepared food from grocery items. Generally:

• Restaurant meals served on premises are fully GST/HST taxable
• Hot prepared food for takeout is generally GST/HST taxable
• Cold prepared food for takeout may be zero-rated if treated as grocery (e.g., a bagged sandwich sold cold from a refrigerated case may be zero-rated, while the same sandwich made to order is taxable)
• Beverages have specific rules — alcoholic always taxable, hot coffee/tea generally taxable, certain juices and milk zero-rated
• The "fewer than 6 servings" rule applies to certain prepared items

POS systems must be programmed correctly. Mistakes compound over thousands of transactions.

High-turnover payroll and ROEs

Restaurants typically have the highest employee turnover of any Canadian industry. The ROE compliance load is substantial: every employee who experiences an interruption of earnings requires an ROE within five calendar days of the end of the pay period. Late ROEs delay EI claims and create complaints. Misclassified terminations (quit vs dismissed) affect EI entitlement and employer rating. We issue ROEs through ROE Web within the required timelines.

Inventory accounting

Restaurant inventory turns rapidly and includes perishable items, prepared in-house items, and pre-purchased items. Proper inventory accounting requires monthly or weekly counts, COGS tracking, and analysis of food cost percentage as a key operating metric. We work with restaurant operators to implement practical inventory procedures that don't require the operator to spend hours per week on counting but still produce reliable financial reporting.

Alcohol licensing compliance

Restaurants serving alcohol must comply with provincial liquor authority rules:

• Ontario — Alcohol and Gaming Commission of Ontario (AGCO)
• Alberta — Alberta Gaming, Liquor and Cannabis (AGLC)
• BC — Liquor and Cannabis Regulation Branch (LCRB) and the Liquor Distribution Branch
• Quebec — Régie des alcools, des courses et des jeux (RACJ)
• And similar authorities in each province and territory

Liquor licensing fees, mark-up structures, and reporting requirements all interact with restaurant accounting.

What Canadian businesses commonly miss about this service

Across the hundreds of Canadian businesses we work with, the same handful of issues come up repeatedly. Many small business owners delay engaging professional accounting until a crisis: a CRA review letter, an unfiled GST/HST return demand, a denied bank loan because financial statements aren't ready, or a Notice of Reassessment that arrived weeks ago. By the time we are first contacted, the cost to fix the problem is often several times what proper ongoing accounting would have cost from the start. Proactive engagement is dramatically cheaper than reactive cleanup.

The Canadian tax landscape also changes constantly. Recent changes that affect most Canadian taxpayers include the 2023 anti-flipping rule (residential real estate sold within 365 days is automatically business income, not capital gain); the Underused Housing Tax (UHT-2900 annual filing requirement for many corporations, partnerships, and trusts holding residential property even when no tax is owing — with $5,000 to $10,000 per-property failure-to-file penalties); the Quebec QST joint registration changes since 2021; the post-2018 Tax on Split Income (TOSI) rules that effectively eliminated casual income splitting through family dividends; the post-2021 $200,000 stock option vesting limit on the 50% deduction for options granted by non-CCPCs; the CSRS 4200 Compilation Engagement standard replacing the older Notice to Reader engagement; and ongoing CRA increased scrutiny on pre-construction assignments, short-term rental businesses, and cash businesses.

How BOMCAS Canada delivers this service

Every engagement begins with a written, fixed-fee engagement letter signed before any work is performed. The engagement letter describes exactly what is in scope, what deliverables you will receive, when those deliverables are due, what your monthly or project fee is, and what (if anything) is outside scope. This eliminates the hourly-billing surprise that most accounting clients fear. The only time we use hourly billing is for genuinely unpredictable items such as CRA audit response or complex one-off projects — and even then we agree to a maximum cap before starting.

Once the engagement letter is signed, you e-sign the CRA authorization (RC59 for businesses or AUT-01 for individuals), and we onboard you to the encrypted client portal with multi-factor authentication. All document exchange flows through the portal — no emailing of sensitive financial documents. Meetings happen by video conference or phone at times that work for you, including outside normal business hours when needed.

Our Canadian tax compliance philosophy

BOMCAS Canada is structured around four operating principles:

1. Tell the truth. If a tax position is aggressive, we say so. If a deduction will not survive a CRA review, we say so. If the engagement is going to cost more than originally quoted because the scope changed, we say so before doing the work.
2. Bill what we said we would bill. No surprise invoices. No scope-creep billing. If something legitimately changes scope, we discuss it and re-quote before doing the additional work.
3. Answer the phone. One-business-day response standard on client communications during normal business hours. No voicemail backlogs.
4. Specialize. Canadian tax and accounting is too complex to be a generalist. We do not do US-only tax, UK tax, or any other foreign jurisdiction in isolation. We are Canadian. Our cross-border work is always anchored by deep Canadian compliance.

What ongoing engagement with BOMCAS Canada looks like

For most clients, the ongoing relationship is structured around predictable monthly deliverables. For an incorporated small business client, that typically includes: monthly cloud bookkeeping with full bank and credit card reconciliation; quarterly or annual GST/HST returns prepared and filed; monthly payroll for owner-managers and any employees, with CRA source deduction remittances; year-end Compilation Engagement (CSRS 4200) financial statements; T2 corporate income tax return; owner-manager T1 personal tax return (and spouse where applicable); annual salary-vs-dividend optimization with written recommendation; unlimited email and phone support during business hours; one quarterly check-in call to review numbers and discuss the business; and CRA correspondence handling for routine review letters.

For a personal tax client, the ongoing engagement includes: annual T1 preparation; any required Quebec TP-1 (for Quebec residents); CRA pre-assessment and post-assessment review response when CRA requests additional documentation; Notice of Assessment reconciliation; and proactive tax planning conversations during the year about RRSP, TFSA, and FHSA contributions, major life events (marriage, kids, retirement, real estate), and any planned business or investment changes.

Frequently asked questions about engaging BOMCAS Canada

Why Canadian businesses choose specialized accounting over generalist accounting

The Canadian tax and accounting landscape has become significantly more complex over the past decade. The 2018 TOSI rules, the 2021 changes to stock option taxation, the 2022 mandatory reporting changes for trusts, the 2023 anti-flipping rule, the Underused Housing Tax, the changes to the small business deduction phase-out for passive investment income, the new CSRS 4200 Compilation Engagement standard, the continued expansion of digital sales tax rules, and the ongoing post-COVID CRA focus on cash businesses and unreported income have all required accountants to specialize more deeply. A generalist firm trying to cover personal tax, corporate tax, US tax, real estate, trusts, cross-border, and every industry vertical inevitably falls behind on the depth of expertise that any one client needs.

BOMCAS Canada is structured deliberately to maintain depth: we are Canadian-only by design; we work in industries where we have genuine specialized experience; we maintain ongoing professional education in Canadian tax law; we use Canadian-experienced staff at every level; and we coordinate with specialized partners (US-licensed cross-border, legal counsel for corporate restructuring, audit-engagement licensed practitioners) where required rather than trying to handle everything in-house.

Talk to a Canadian accountant who knows your industry

Call 780-667-5250 or submit the contact form. We respond within one business day.

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