February 28, 2024
#Finance #Legal

Accounting Services for the Hospitality Industry

CPA for Hospitality Industry - Stubsondemand

Hospitality Industry

The hospitality industry, encompassing hotels, restaurants, and entertainment venues, is known for its dynamic and customer-centric nature. Amid the constant hustle, effective financial management is vital for sustained success in this competitive sector.

Accounting Services for the Hospitality Industry

Hospitality businesses handle diverse financial transactions, from managing daily sales to overseeing payroll for a large staff. Accurate and timely bookkeeping is essential for tracking revenue, managing expenses, and ensuring compliance with hospitality industry accounting standards.

Effective bookkeeping in the hospitality industry also involves inventory management, as establishments need to track perishable goods and monitor costs of goods sold (COGS). Implementing a robust accounting system helps businesses maintain control over their financial processes.

Tax Planning

Tax planning in the hospitality industry involves understanding unique deductions related to the industry. This may include optimizing expenses for renovations or upgrades, navigating employee-related tax credits, and managing complex sales tax implications, especially for establishments serving food and beverages.

Given the seasonal and sometimes unpredictable nature of the hospitality industry, effective tax planning can contribute significantly to overall financial stability. It involves strategies to optimize deductions, manage cash flow, and ensure compliance with state and federal tax regulations.

Taxation Laws in Oklahoma

The gross receipts from room rentals in hotels, motels, apartments, etc. in Oklahoma, are subject to sales tax regardless of the length of stay. However, sales tax does not apply to rental agreements governed by the Oklahoma Residential Landlord and Tenant Act. Revenue from deposit forfeitures is not subject to sales tax, but revenue from guaranteed rooms is taxable even if the guest did not occupy the room. Local telephone call proceeds are taxable, and expenses related to such services cannot be deducted. Items like toiletries and supplies purchased by hotels or motels are subject to sales or use tax. Food or drinks provided as part of a packaged room rate are exempt from sales tax if no separate charge is made for them. Hotel or motel operators who also sell meals must remit sales tax on inventory withdrawn for complimentary meals. Alcoholic beverages sold from a mini-bar in hotel rooms are subject to sales tax.

710:65-19-143. Hotels, motels, apartments, etc.

(a) The gross receipts from the furnishing of rooms, except meeting rooms, by a hotel, apartment-hotel, cottage camp, or lodging house open to the public is subject to sales tax without regard to the length of guest stay. Sales tax does not apply to rental agreements which are governed by the Oklahoma Residential Landlord and Tenant Act [41 O.S. §§101 et seq.].

(b) The revenue received from the forfeiture of a deposit is not revenue arising from the furnishing of a room and is therefore not subject to sales tax. However, revenue which is derived from a guaranteed room is subject to sales tax, even if the guest did not occupy the room.

(c) The gross proceeds received by hotels or other persons for local telephone calls are considered a part of the service of furnishing rooms and are, therefore, taxable. No deduction will be allowed for any expense in connection with such service such as switchboard rental, trunk line rental, etc.

(d) Supplies such as toilet tissue, soap, shoeshine cloths, clothes bags, matches, facial tissue, and other items available for guests’ use are subject to sales or use tax at the time of purchase by the hotel or motel. Linens, furniture, pool equipment and supplies, and similar items are subject to sales or use tax at the time purchased by the hotel or motel.

(e) Sales tax is not due on food or drinks that are provided as a part of a packaged room rate by hotel or motel operators if the furnishing of the room is subject to tax under Section 1354 of Title 68 and if no separate charge is made for the food or drinks. Such food or drinks are considered to be sold at retail as part of the total charge for the room.

(f) With the exception of subsection hotel or motel operators who are also vendors of meals are required to remit sales tax on the “sales value” of inventory withdrawn from stock that is used in providing complimentary meals to its customers. The proper sales tax basis to be used for sales of food and beverages for related services, and for various “complimentary” offerings, both in the context of rooms and of other services, is explained in more detail in OAC 710:65- 1-2 and 710:65-19-109.

(g) A “mini-bar” means a closed container, either refrigerated or nonrefrigerated, with access to the interior limited to a key, magnetic card, or similar device and controlled at all times by the holder of the license. (h) A hotel beverage license shall authorize the holder to sell or serve alcoholic beverages in 50 milliliter spirits, 187 milliliter wine and 12 ounce malt beverage containers which are distributed from a hotel room mini-bar. The total retail value of the sale of alcoholic beverages by the license-holder is subject to sales tax, pursuant to OAC 710:20-5-4.

[Source: Amended at 11 Ok Reg 3521, eff 6-26-94; Amended at 15 Ok Reg 2827, eff 6-25-98; Amended at 16 Ok Reg 2653, eff 6-25-99; Amended at 18 Ok Reg 2823, eff 6-25-01; Amended at 24 Ok Reg 2397, eff 6-25-07; Amended at 33 Ok Reg 1094, eff 8-25-16]

Hire a CPA

The fast-paced and multifaceted nature of the hospitality industry makes the expertise of a Certified Public Accountant (CPA) invaluable. A CPA with experience in hospitality brings insights into industry-specific tax strategies, financial management, and compliance with regulatory requirements.

CPAs assist hospitality businesses in optimizing their tax position, ensuring adherence to tax laws, and implementing effective accounting systems. Their role extends beyond traditional accounting, providing strategic financial advice to enhance overall business performance.

Why Choose Epsilon Accounting Solutions, CPA in Edmond, OK?

Epsilon Accounting Solutions understands the unique financial challenges faced by businesses in the hospitality sector. With a commitment to personalized service and expertise in hospitality accounting, Epsilon is the trusted partner for establishments seeking financial efficiency and compliance.


Disclaimer: This article does not constitute tax advice. Please consult Ahmed Baqir, CPA at Epsilon Accounting Solutions PLLC, before making any tax-related decisions or taking any actions based on the information provided in this article. Ahmed Baqir, CPA, has the expertise and knowledge to provide personalized advice tailored to your specific financial situation and goals.

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