Who this is for
Restaurant and food business owners who suspect their numbers are not quite right, and anyone taking over a restaurant’s books.
The five mistakes
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Deposits recorded as sales. Delivery apps and card processors deposit net of fees. Recording the deposit understates sales and hides the fees. Fix: record gross sales from the reports and the fees as expenses. Our guide on app deposits walks through it.
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Personal spending through the business. Groceries, family meals, a personal phone, a trip. In a corporation these become taxable benefits to the owner; in a sole proprietorship they are simply not deductible. Fix: a separate personal account, and a monthly review of anything that looks mixed.
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No inventory count. Food, drink and packaging on hand at year end change the cost of goods sold. Without a count the profit is wrong in both directions over time. Fix: a count on the last day of the fiscal year, every year, on a sheet you keep.
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Equipment expensed as supplies. Ovens, fridges, point-of-sale hardware, furniture. These last years and are claimed over years. Fix: a separate list of equipment with dates and prices, and let the depreciation rules do the rest.
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Tips outside payroll. Card tips the restaurant pays out are controlled tips, with CPP, EI and tax obligations. Fix: run them through payroll from the next pay period and keep the terminal reports.
One thing many people do not realize
A commercial oven, a walk-in cooler or a point-of-sale system is not a supply. It is a capital purchase, claimed over several years through depreciation. Under the proposed 2026 immediate expensing rules it might be claimed in full if bought after September 15, 2026. Expensing it all at once under the old rules overstates expenses in one year and leaves nothing to claim in the years it keeps working.
What to prepare
- Your current bookkeeping file or spreadsheet
- Point-of-sale, delivery app and card processor reports for a recent month
- Bank and credit card statements for the same month
- A list of equipment bought in the last two years
- How tips are handled today
When professional help may make sense
If the books have had these problems for more than a year, past GST returns and tax returns may need adjusting. That is a conversation to have before the next filing, not after a letter.
How Rex Tax may be able to help
We do monthly bookkeeping, GST filing and payroll for food businesses, and we clean up past periods when needed.
Official sources
- CRA guide T4002, chapter 2: inventory and cost of goods sold
- CRA: Keeping records
- CRA: Tips and gratuities, CPP and EI explained
This guide is general information, not advice about your situation. It reflects the rules for the 2026 tax year. It has not yet been reviewed by a practitioner. The information was checked against the official sources listed above on the date shown. Rules change. Check the official sources above or ask us. How we prepare these guides.