Managers reading this article will learn about a wide range of regulatory
and administrative controls required by federal, state, and local agencies.
They will learn how the industry is regulated by these agencies, including the
filing of forms, submitting to inspections and applying for licenses, operating
their businesses in a specified manner, and maintaining facilities and equipment
in good working order. Additional topics include managing conflicting
regulations, responding to an inquiry made by a regulatory or administrative
agency, and monitoring regulatory modifications to keep current with everchanging
Restaurants are regulated by numerous federal, state, and local governmental
entities. Managers must interact with these agencies and follow all of the applicable
procedures and regulations they impose. This includes filling out forms
and paperwork, obtaining licenses, maintaining the property to specified codes
and standards, providing a safe working environment, and opening facilities for
It is not possible for managers to be completely knowledgeable about all
requirements that may be applicable to their operations. They must, however:
- Be aware of the major regulatory agencies
- Understand how to resolve conflicting regulations
- Know how to respond to an inquiry or complaint
- Keep current with regulatory changes that affect their operations
FEDERAL REGULATORY AND
Internal Revenue Service (IRS)
The IRS is part of the U.S. Department of the Treasury. Its ability to charge a
person with a criminal act makes it an agency that deserves a manager’s
thoughtful attention.Managers interact with the IRS because a manager is both
a taxpayer (who pays income tax on compensation and/or business profits) and
a tax collector (who withholds employee taxes on income). The IRS requires
businesses, including restaurants, to:
- File quarterly income tax returns (Form 941) and make payments on
profits earned from business operations. Taxes must be filed on or before
the last day of the month following the end of each calendar
- File an Income and Tax Statement (Form W-3) with the Social Security
Administration on or before the last day of February.
- Withhold income taxes from the wages of all employees (as specified in
Circular E) and deposit these taxes (Form 8109) with the IRS at regu-
lar intervals. Employee withholding taxes must be paid quarterly if the
period’s total withheld tax is less than $500, once a month if the total
withheld tax is between $500 and $3,000, or within three working days
of a payroll if the withheld amount is greater than $3,000.
- Report all employee tip income (Form 8027) and withhold taxes on it.
- Record the value of employee meals when they are considered part of
an employee’s income.
- Record all payments to independent contractors (Forms 1096 and
1099) and file forms listing those payments.
- Furnish a record of withheld taxes (Form W-2) to employees on or before
January 31 and maintain these records for four years.
The IRS conducts periodic audits of a business’s financial accounts and tax
records. A manager must respond if notified by the IRS of a forthcoming audit.
The manager should also consult a Certified Public Accountant (CPA) or an attorney
specializing in tax audits to ensure that the appropriate documents are
Federal tax laws are very complex. Managers may be responsible for submitting
or filing business taxes and must understand their role in ensuring a
company’s compliance with federal tax laws. For a complete list of a business’s
tax responsibilities and to obtain copies of various tax forms, visit the IRS Web
Occupational Safety and Health Administration (OSHA)
OSHA is an agency of the Department of Labor and works “to assure, so far as
possible, every working man and woman in the nation safe and healthful working
All businesses, including restaurants, must comply with OSHA’s extensive
safety practices, equipment specifications, and employee communication procedures.
Specifically, they must: