Service Charge & Tax

kclepire

My coworkers daughter got married this summer at the same venue we are having.  She shared their invoice with me to help us plan. Something on it looks a little strange to me so here's the question:  Should tax be calculated just on the food total or should it be calculated on the sum of food and service charge?

Muffers

Tax should be calculated separately on food and alcoholic beverages b/c alcohol is taxed at a higher rate. Your food is equal to the sales tax, which I believe now is 6.875% (plus a bit extra if you live in Hennepin County, Mpls or St. Paul)  whereas alcohol is the sales tax rate + 2.5%, so a little over 9%. The service charge depends on your venue, most of them I've seen are between 18% & 20%.Hope that helps!

beka0404

I don't know if it varies by county, but my reception will be in Mpls, and the service charge is taxable - I believe it is considered taxable labor.Such a bummer.

beka0404

Here is what my proposal looks like:Taxes - 7.78% for Food PurchaseTaxes - 10.28% for Beverage PurchaseTaxes - 7.78% for Labor Purchase (the svc & mgmt fee)

kclepire

Thanks.  I'm sure that the venue charges correctly....I just didn't know if you could charge tax on labor, but it sounds like you can.

wittyschaffy

Just be sure if you're bringing in wine and they charge a corkage fee that it doesn't get taxed. the tax code changed on that one last year and we had problems both with my sister's wedding and mine since not many people really knew about the change. We wouldn't have known either except that our wine supplier mentioned it to us.