As a restaurant owner using Peblla’s restaurant technology solutions, it's essential to understand the tax implications of your transactions—especially Form 1099-K. This form, issued by third-party payment processors, reports certain payment transactions to both businesses and the IRS. In this guide, we’ll break down what Form 1099-K is, why you receive it, and what you need to do with it.
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What is Form 1099-K?
Form 1099-K, Payment Card and Third-Party Network Transactions, is a tax form used to report payments received via credit cards, debit cards, and third-party processors like Peblla, Square, Stripe, or PayPal. It helps the IRS track taxable income from electronic transactions, ensuring businesses properly report their earnings.
Who Issues Form 1099-K?
Peblla and other payment processors must send Form 1099-K if:
Your restaurant processed over $20,000 in transactions AND
You had more than 200 transactions in a year.
(Note: Some states have different thresholds and require 1099-K reporting for lower amounts. Check with your tax professional for state-specific rules.)
Why Did You Receive Form 1099-K?
If your restaurant accepts credit cards or online payments through Peblla or other platforms, you may receive Form 1099-K because:
Your total gross sales exceeded IRS reporting thresholds.
You used a third-party processor (like Peblla’s payment solutions) to handle transactions.
Your state requires 1099-K reporting even if you didn’t meet the federal threshold.
It’s important to compare Form 1099-K with your records to ensure accuracy before filing taxes.
How to Use Form 1099-K for Tax Filing
Step 1: Review Your Form 1099-K
Each 1099-K includes:
Gross amount of reportable transactions.
Breakdown of monthly payments to help reconcile records.
Your business details (ensure they match your tax records).
Step 2: Reconcile with Your Restaurant’s Sales Records
Compare the total revenue reported on Form 1099-K with your POS sales reports from Peblla.
Make sure chargebacks and non-card transactions (like cash sales) are accounted for separately.
If there are discrepancies, contact your payment processor for clarification.
Step 3: Report Your Income Correctly
Form 1099-K reports gross sales, but your taxable income may be different after chargebacks and business expenses.
Ensure that all restaurant revenue sources (card, cash, online orders, etc.) are correctly included on your tax return.
Work with an accountant or tax professional if you need help reporting accurately.
Compare Sales Summary and Form 1099-K Totals
The totals on your Sales Summary report may differ from the amounts reported on your Form 1099-K due to differences in timing and reporting methods.
Add Up All 1099-K Forms – If you receive multiple Form 1099-Ks, make sure to sum them to get the complete total.
Timing Differences Between Reports – The Sales Summary report records sales based on the order date, while Form 1099-K reflects deposits, which typically occur 1-3 days after a sale. This means that some sales recorded in the Sales Summary at the end of the year may not be included in that year’s 1099-K, and vice versa.
Additionally, different reports use different time references:
Sales Overview is based on order time.
Transacting Details is based on transaction time.
Payouts is based on payout initiation time.
Since each report follows a different time dimension, filtering for the same date range across these reports may result in differences in totals.
Common Questions About Form 1099-K
1. What if my restaurant receives multiple 1099-K forms?
If you use multiple payment processors, you may receive more than one Form 1099-K. Be sure to combine totals when reporting revenue on your taxes.
2. Does Form 1099-K include tips?
Yes, if tips are collected through credit card payments, they may be included in the gross amount reported. However, since tips belong to employees, they should be accounted for separately when filing taxes.
3. What if the amount on my 1099-K is incorrect?
Verify the total with your Peblla reports and bank deposits.
If there’s an error, contact the payment processor that issued the form.
If necessary, request a corrected 1099-K before filing taxes.
4. Do I need to pay taxes on all 1099-K income?
Receiving a 1099-K does not mean you owe additional taxes—it simply reports your payments. You only pay taxes on net income (after expenses and deductions).