Ratios Bar Cash Receipts and Credit Card Receipts

[Gretel]

Where can I find info on typical ratios for bar income - cash, credit card and checks?

[TaxGuyBill]

Where can I find info on typical ratios for bar income - cash, credit card and checks?

I suspect that ratio would vary tremendously depending on the area the business is located.

Out of curiosity, why do you want that information?

[Lion]

Probably a hospitality professional organization. Or, the IRS's Audit Technique Guide for that industry or for Cash Intensive Businesses. Or, the appropriate Market Segment Specialization Program, such as https://www.unclefed.com/SurviveIRS/..._atg_final.pdf

[Gretel]

I suspect that ratio would vary tremendously depending on the area the business is located.

Out of curiosity, why do you want that information?

Well, I was somewhat na?ve. Since 20 years I am doing the books for a real small bar and I thought we had the understanding that he deposits all of his income and writes checks for all expenses. While the later is probably true, he never deposited cash, only checks and credit card receipts. Became obvious since he issues two checks to the gaming co. in high amounts. Thing is that the income reported goes by his bank deposits. I just tried to get a better feel for how much cash was skimmed. I am certain he still would not have any taxable income from his bar with the current standard deduction but only SE income. I feel so stupid and of course, I fired him.

[Gretel]

Probably a hospitality professional organization. Or, the IRS's Audit Technique Guide for that industry or for Cash Intensive Businesses. Or, the appropriate Market Segment Specialization Program, such as https://www.unclefed.com/SurviveIRS/..._atg_final.pdf

Thanks Lion, I looked through the IRS Audit Technique Guide but didn't see any reference to this. The MSSP seems to be easier to work with.

[TaxGuyBill]

I thought we had the understanding that he deposits all of his income

Yeah, I've learned to ask clients EVERY year if there is any other income not deposited into the bank or on a 1099. Often I ask it via email so I have a written response from them.

But you fired him, so try to get it off your mind. :-)

[spanel]

Another way of getting close is to look at how much alcohol is being purchased. Cost of goods sold should be under 50% of sales or so. In IL, they have to report how much is purchased on their sales tax returns as a way to try to keep them honest.

Chris

[Gretel]

Yeah, I've learned to ask clients EVERY year if there is any other income not deposited into the bank or on a 1099. Often I ask it via email so I have a written response from them.

But you fired him, so try to get it off your mind. :-)

The funny thing is that I do that with my questionnaire but I could swear that he would have said "no" since in his mind the cash on hand is mainly used for poker payouts, just not that much. When I asked him yesterday how much cash he has set aside for these payouts (other than what is in the till or should be in the till) he opened his vest and showed me 3 stacks of $20ties in different place amounting to $3,000. I almost felt like I was in a movie.

[Gretel]

Thanks Chris, this is good information.

[ATSMAN]

https://www.irs.gov/businesses/small-businesses-self-employed/cash-intensive-businesses-audit-techniques-guide-table-of-contents

You may find this helpful.

[Uncle Sam]

Try this source - https://www.unclefed.com/SurviveIRS/..._atg_final.pdf

[Gretel]

Thanks everyone, every bit is appreciated.