How to register and file Illinois sales tax for a restaurant

An Illinois restaurant registers with the Department of Revenue through MyTax Illinois, using Form REG-1, before it makes purchases, sales or hires an employee. Online registration usually takes one to two business days, while a paper application takes weeks. Sales tax returns on Form ST-1 are due shortly after each reporting period, and a timely return can earn a vendor discount.

How do you register for Illinois sales tax?

The Department says the fastest way is MyTax Illinois at mytax.illinois.gov, where you choose Register a New Business (Form REG-1). Processing takes about one to two business days online. You can also mail Form REG-1, which takes four to eight weeks, or visit a Department office for a paper form and help. You may need related schedules, such as Schedule REG-1-L for business site location information and Schedule REG-1-O for owner and officer information.

The Department's advice is to register before you make any purchases or sales, or hire an employee. For a new restaurant, that means registering as soon as the entity exists and well before the first service.

Where is the certificate of registration?

The Retailers' Occupation Tax certificate is issued electronically and not mailed. Log in to MyTax Illinois, choose View more account options, then View Account Letters in the Letters and Messages panel to print it. If you cannot print it, contact Central Registration, with your account ID or license number and business name, to request a paper copy. Many cities also ask to see the certificate when you apply for local licenses.

When is the return due?

Form ST-1 is due shortly after the end of each reporting period, and annual filers have their own due date. The Department sets your filing frequency from your average monthly liability, with larger filers reporting monthly and smaller ones quarterly or annually. Look at your account in MyTax Illinois for the schedule and due dates it assigned, since those are the ones that count.

What is the vendor discount?

Illinois lets a retailer who files and pays on time claim a discount on the tax due. The discount is calculated for you when you file in MyTax Illinois, and a late return or payment forfeits it and adds a penalty. Ask the Department for the current rate and any monthly cap, because both can change.

A worked example of the discount

Say a restaurant collects $6,000 of sales tax in a month and the discount were 1 percent, a made-up rate used only for the arithmetic. That would be $60 for filing and paying on time, or $720 over a year for doing what you must do anyway. A restaurant that files late three times in a year gives up $180 of it and adds penalties. For a business with thin margins, even a small discount is worth a calendar reminder.

How do you prepare each return?

1. Run the sales report for the period by tax category.
2. Check separately for any city-level taxes you collect, such as Chicago's restaurant tax, which follow their own reporting.
3. Reconcile the tax collected in the register to the return.
4. File in MyTax Illinois at least two business days before the due date.
5. Pay, and save the confirmation.

What happens when you open a second location?

Register the new location and ask the Department how it handles multiple locations under one account. Each location's sales are reported with its own local rate, so keep the register data by location.

What if you cannot pay?

File the return on time and pay what you can. Then ask the Department about a payment plan. A return filed on time keeps one problem off the list, and a plan arranged early is easier to get than one requested after a notice.

What mistakes should you avoid?

• Selling before the registration is in place.
• Missing the discount by filing a day late.
• Using the same rate for every location.
• Forgetting that the certificate is electronic.
• Letting the person who handled the account leave without handing over the MyTax Illinois login.

What should your filing calendar include?

Create recurring reminders for each filing period. At the start, run the sales report. A few days later, prepare the return and check it against the register. Then file and pay at least two business days before the due date, which leaves slack for a login problem or a bank delay. Put the annual return date in your calendar in December if you file annually. Give one person the job and name a backup, because a return missed during a vacation is the most common reason a small business loses its vendor discount. When the person who files leaves, hand over the MyTax Illinois login in writing.

More guides for your business:

• Illinois restaurant sales tax: how Chicago and Cook County rates stack
• Illinois food handler training and food manager allergen rules
• Illinois BASSET training and liquor licenses for restaurants

More in the US guides for food businesses.