COOK Connect Taxes

Please note: The following is intended as a general outline of applicable taxes, but we are not tax professionals and recommend you consult one if you have question on your home restaurant.

General FAQ

How is Sales Tax collected & paid?

COOK Connect automatically collects Sales Tax on all purchases through the platform, and pays it on your behalf through the California Department of Tax & Fee Administration (CDTFA) . The 2019's Marketplace Facilitator Act which explicitly moved the burden of tracking & paying sales tax from you to the Marketplace Facilitator (COOK Alliance).

To help you demonstrate compliance if ever requested by any regulatory body or during an audit, this letter confirms that you are operating within the legal framework established by the Marketplace Facilitator Act.

Please note: You are solely responsible for paying taxes on all sales made outside of COOK Connect (e.g. through your personal website). While we collect and pay applicable Sales Taxes, you will be responsible for a Self Employment Tax, as detailed below.

What about Seller’s Permits?

For tax purposes, you do not need a Seller’s Permit if 100% of your sales are processed through a certified online marketplace like COOK Connect, which remits sales tax on your behalf.

However, some cities may still require a Seller’s Permit in order to obtain a local business license.

We also recommend getting a Seller’s Permit in case you ever want to accept special orders or sell outside of the COOK Connect platform in the future.

Self-Employment & Income Taxes

What forms do I need?

The form we issue you to report payments for tax purposes is a 1099K, or Payment Card and Third Party Network Transactions form. Here's a resource to read more on how the 1099K works: 1099K FAQ from the IRS

How often do I report my taxes?

We recommend you keep your own records. That said, Paypal will issue your 1099K for the preceding year annually before January 31st if you received at least $5000 from COOK Connect sales in the previous year. You are welcome to calculate taxes for your sales at a time interval of your choice by looking back at your past menus and you may be required to pay estimated taxes throughout the year as a self-employed individual (see Appendix). Looking at your business PayPal is often the easiest way to track sales over time.

How do I determine how much I owe for Self-Employment Tax?

You will be paying a self employment tax on your net profits, meaning you will subtract expenses (see below) from your gross sales stated on your 1099K, and calculate your self employment tax (15.3% in CA) from that number. For further reading: 1099K form's implications for self employment, from TurboTax

What can I deduct from my gross sales for the Self-Employment Tax?

Here is a framework for determining applicable deductions from your taxable income. There are many opportunities for deductions, so we recommend keeping track of all grocery receipts and utility bills for reporting purposes.