willatbird
Level 5

Tips are reported as a liability and then a payment against that (in this restaurant). A matching amount is reported on the servers' W2s. The owners do not receive any of the tips.

San Francisco gross receipts tax is a major expense and we don't want to report the tips OR the sales tax in the gross receipts for that reason.

And yes, CA calculates the LLC fees based on gross receipts. This could put them into the next bracket.