I’m trying to understand how sales tax works for restaurants and how to make sure my business is properly set up as tax-exempt where applicable. Could someone help clarify:
Great question—understanding sales tax requirements for restaurants is incredibly important, especially when operating across different states or municipalities.
Sales tax is a percentage-based fee that restaurants are typically required to collect from customers on taxable goods or services. The rules around who must collect sales tax—and how much—is determined by local and state tax authorities, so the exact rate and requirements can vary depending on where your restaurant operates.
Some cities or states fully exempt certain types of businesses (like nonprofit organizations or specific food service setups) from collecting sales tax. Others mandate it across the board. That’s why it’s essential to review your state and city’s tax regulations to determine whether or not you’re legally required to collect sales tax from your customers.
In most cases, yes. If your business is not exempt, you are legally obligated to collect and remit sales tax. Falsely claiming exemption or failing to collect sales tax when required can result in penalties or legal action. Always consult your local tax authority or accountant if you’re unsure.
OrderOut automatically applies sales tax percentages to your orders based on your restaurant’s city and state. This ensures you’re charging the correct amount of sales tax according to local regulations, without needing to set it up manually.
However, if your business is officially tax-exempt, we make it easy to reflect that in your account:
Simply go to your Sales Tax page in the OrderOut Dashboard
Use the toggle option to mark your account as sales tax exempt
Once enabled, we’ll stop applying sales tax to your orders
If you believe your sales tax is being misapplied—or if you’ve already submitted exemption documentation but still see tax being added—please contact our support team directly at support@orderout.co. We’ll be happy to review your account and ensure everything is set up correctly.