Inspections, Permits, Sales Taxes and Food Trucks
- Mar 25, 2015 | Ryan O'Donnell
Gone are the days of the roach coach with its greasy hamburgers and semi-warm soft drinks. Humanity has evolved to haute cuisine on wheels, aka food trucks. No longer is the American workforce forced to eat at the nearest local brick and mortar eating establishments. Like communication, lunch has gone mobile.
We're not talking about the iRestaurant (although you never know what Apple has up their sleeve). We're talking about food trucks. High end meals-on-wheels bring a great dining experience to the streets offering a variety of options for nearly every day of the week. We wanted to dig up some interesting tax facts about food trucks.
First, there are many options for mobile food. Roving restauranteurs are in no way limited to food trucks. Kiosks, food carts, concession trailers, and even bicycles and busses (think, "bustaurant"). Depending on what the chef intends on serving, any of these modes of transportation may fit the bill. None have a dramatic impact on sales tax, but they may limit what you are capable of selling. It's hard to imaging a food cart having the equipment necessary to prepare the same quality of food that a fully equipped food truck can handle. Never mind possible sanitation and permit requirements.
Seattle’s Maximus Minimus
Until recently, the overwhelming connotation for food trucks was that they are not sanitary or clean. That attitude, however, is changing with the enforcement of more strict health codes and sanitary regulations. Foodies are taking notice.
Did you know food trucks are required to have a sink with hot and cold running water in addition to a health department inspection, local vendor permits, sales tax account (seller’s permit), fire safety permit, and safe handling food permit? Many cities like Boston and Chicago have websites detailing the process of getting set up as a food truck.
The regulations very significantly depending on the city and state your truck is operating in.
Collect the correct sales tax for your location
Many states require food trucks to collect the appropriate sales tax for the location the sale is made. North Carolina sums it up like this, "A mobile vendor should collect and remit sales tax in the location where the customer receives the good or product."
Wether you are selling in San Francisco or Oakland, you need to charge the correct sales tax rate based on your location. Many cities have sales tax rates that even vary by address. Sellers can use our tax rate lookup tool to enter the address of where they are parked and the correct tax rate will be displayed.
Know the Rules
It isn't enough to know you may have a sales tax responsibility for the food you are selling. You also need to know the rules that apply to your situation. Washington DC taxes food truck sales that exceed $3,750 a quarter at the rate of 10 percent. Texas follows the same rules as North Carolina and California except they exempt bakery goods from tax unless the item is sold on a plate, in a bowl or with eating utensils. Florida charges tax on all food truck sales with the exception of bottled water.
Take the time to research how your state government taxes mobile food sales before you fire up your food truck. Missed payments and outstanding tax may lead to penalties and interest payments.
Don’t forget the IRS
The current popularity of food trucks has given the IRS new reasons to examine these businesses. While more and more food trucks are integrating Square, some still demand cash payments. Carefully record where you are selling, how much you sold, and the cost of goods. You want to be sure your sales history, cash flows, and documentation is in order should you ever get audited. Moreover, did you know you can write off any expenses associated with correcting health code violations? You can’t however write-off parking tickets and moving violations.
Hungry? Roaming Hunger has you covered. Use their site to locate your favorite food truck in your favorite city. Bon appetite!