Making Sales Tax One Less Thing to Worry About in Your Business

If you ask most hospitality operators where they spend their time, you’ll hear the usual answers: staffing, inventory, guest experience, events, marketing. Rarely will anyone say “sales tax.” And yet, it might be one of the most important parts of a hospitality business owner’s operation. In a recent Behind the Tab conversation with Christine Vickery of Davo by Avalara, one theme came through loud and clear: sales tax isn’t just an administrative task. It’s a hidden operational risk that can quietly derail even the best-run businesses.

The Problem: Sales Tax Doesn’t Add Value, But It Can Definitely Destroy It

Here’s the reality operators face: Sales tax doesn’t drive revenue. It doesn’t improve guest experience. It doesn’t help you sell more beer, fill more courts, or turn more tables. But if it’s mishandled, it can cost you, bigly. As Christine explains, most operators treat sales tax like “money they have,” because it sits in the same account as their operating cash. That’s where the trouble starts. When cash is tight as it often is in hospitality businesses, that tax money gets used for things. From payroll, to emergency repairs, to inventory and event rent, cash that sits in a business account is going to get used. And these are all reasonable expenses in-the-moment. But the consequences of underpaying sales tax because the money isn’t there compound quickly.

The Hidden Risk: Penalties, Fees, and Compounding Debt

Sales tax penalties are not forgiving. In some states, late payments can result in:

• 10%+ penalties per period
• Compounding fees month over month
• Penalties as high as 50% of what you owe
• Audits, liens, or even account garnishment

What starts as a manageable issue can quickly snowball into a financial burden that’s difficult to recover from. And here’s the kicker: even if you owe zero, you can still be penalized for filing late. This is why sales tax is fundamentally different from most operational challenges. It’s about compliance and risk mitigation.

Why It’s So Complicated (And Why That Matters)

If sales tax were simple, this wouldn’t be such a widespread issue. But it’s not. Rates and rules vary by State, City, Product type, or even the Service model i.e., dine-in vs. takeout vs. delivery. In some cases, the exact same item can be taxed differently depending on how and where it’s consumed. For example:

• A prepared food item eaten on-site may be taxed differently than the same item taken to-go
• Packaging (like bags) may carry additional fees
• Delivery rules can vary depending on who fulfills the order

For operators already juggling staffing, inventory, and guest experience, keeping up with these nuances is difficult and in many circumstances downright unrealistic. And that’s why most don’t.

The Time Drain No One Talks About

Beyond risk, there’s another cost: time. According to data shared in the conversation, over half of operators spend between 1–10 hours per month on sales tax-related activities. That’s up to 120 hours per year and three full work weeks … spent on something that doesn’t grow your business. For operators focused on profitability and guest experience, that’s a massive opportunity cost.

The Core Insight: If You Touch It, It Should Add Value

One of the most important takeaways from the conversation is a simple framework: If you’re touching something in your business, it should either add value or create value. Sales tax does neither. That makes it a prime candidate for automation.

The Shift: Treat Sales Tax Like Payroll

Most operators already understand the importance of automating payroll. It’s structured, predictable, and high-risk if done incorrectly. Sales tax should be treated the same way. Instead of:

• Collecting it
• Letting it sit in your account
• Trying to reconcile and file later

The modern approach is:

• Automatically separate it daily
• Remove it from operating cash flow
• File and remit on time, every time

This shift eliminates the biggest risk: commingling funds. When the money is no longer “visible” in your account, it’s no longer there to be used.

Real-World Impact: Less Stress, Better Decisions

Operators using automated approaches consistently report the same benefits:

• No more surprise tax bills
• Improved cash flow visibility
• Reduced reliance on manual processes
• Peace of mind

And perhaps most importantly: the ability to focus on what actually drives the business. As one operator put it, sales tax becomes “one less thing to worry about,” freeing up time and energy for growth-focused decisions.

A Practical 30-Day Reset for Operators

If you’re not currently automating your sales tax, here’s a simple plan to improve your position over the next 30 days:

1. Track Your Time

Measure how many hours you (or your team) spend on sales tax tasks.

2. Assess the Risk

Ask yourself:

• Are you ever late?
• Are you confident in your filings?
• Are you separating funds properly?

3. Evaluate Your Cash Flow

Look at your account and identify how much of your balance is actually sales tax.

If you had to pay it tomorrow, would it be there?

4. Consider Automation

Explore solutions that integrate directly with your POS and remove the manual burden.

The goal isn’t just efficiency — it’s eliminating risk entirely.

The Bottom Line

In hospitality, your time and attention are your most valuable resources. Sales tax demands both, without giving anything back. The operators who win are the ones who:

• Automate what doesn’t create value
• Protect their cash flow
• Reduce operational risk

Because at the end of the day, to be successful in hospitality you can’t just focus on growing your revenue. You also have to focus on how you are going to protect it. To learn more about the GoTab + Davo by Avalara integration visit https://gotab.com/integrations/davo. 

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