Integrate 3rd Party Apps to POS

Restaurant owners often wonder whether 3rd party apps such as Grubhub and Ubereats actually generate added revenue or added expense for their restaurant. From mismanaged workflows to overpayment of sales tax, these apps can cause more pain than profit. To maximize profit and minimize pain, it’s imperative that owners understand and manage them correctly.  

The best practice and most efficient way to manage these apps is to run orders through the POS.  This makes the POS system to be the official record of all sales, both those in the restaurant and from 3rd party apps. Setting up the POS this way will create efficient workflows and help manage multiple revenue streams in one place. Failure to do this can lead to kitchen chaos, poor customer experiences and costly fines and penalties or overpayment of sales tax.  

Managing sales tax for 3rd party apps is complex because each app creates a new revenue stream to manage.  Making the POS the official record of sale and running all 3rd party orders through the POS will make managing sales tax much easier. 

Start by entering 3rd party orders coming to the restaurant directly into the POS as received. However, if the POS is not set-up correctly, this can create a huge headache on the back end because revenue will be recorded multiple times. The instructions below show how to set-up the POS to avoid this happening. Running orders through the POS also helps create maximum efficiency by streamlining workflows to the kitchen for better customer fulfillment on the front end and less work in the back office by creating a single record of sales. 

States are changing laws around who is responsible for collecting and remitting sales tax for 3rd party app orders and it can be confusing to know who is responsible and how much should be paid. Until recently sales tax was collected by 3rd party apps and remitted to restaurants to file and pay to the state.  The exception was a handful of states that required 3rd party apps to remit their own sales tax. But a recent Supreme Court ruling around e-commerce has resulted in many states changing the laws to now require or will soon require 3rd party apps to collect and remit sales tax. This means restaurants in these states (see list below) are, or will no longer be responsible for paying sales tax on 3rd party app sales.  If the POS is not setup correctly, this can result in restaurants double-paying sales tax. See the list of states below to determine who is responsible for remitting sales tax to your state.

Once you have determined who is responsible for remitting sales tax in your state,  it’s simply a matter of setting up your POS correctly. Here are two simple ways to set-up the POS to manage 3rd party apps, first for states where you remit the sales tax third party apps collect. And second for states where the apps are now required to collect and remit sales tax. The only difference will be step 2 of the setup process. 

POS SETUP FOR  3rd Party APPS WHEN SALES TAX IS REMITTED TO YOU

  1. Create an ORDER TYPE named for each 3rd party app – (Typical order types are“Dine In” or “To-Go”)
  2. Assign the new ORDER TYPE the correct tax rate(s) for your tax jurisdiction.
  3. Create a TENDER TYPE named for each corresponding 3rd party app – (Typical tender types are  Cash or Check or Credit/Debit”)

POS SETUP FOR  3rd Party APPS WHERE THEY ARE REQUIRED TO REMIT SALES TAX

  1. Create an ORDER TYPE named for each 3rd party app – (Typical order types are“Dine In” or “To-Go”)
  2. Assign the new ORDER TYPE a 0% tax rate for your tax jurisdiction.
  3. Create a TENDER TYPE named for each corresponding 3rd party app – (Typical tender types are  Cash or Check or Credit/Debit”)

ENTERING ORDERS

Enter orders for 3rd party apps into your POS as they are received using the appropriate ORDER TYPE.  When the order is complete, close it under the corresponding TENDER TYPE. 

Entering orders this way creates an efficient workflow to the kitchen and customer while also streamlining the back office work. Sales are recorded in the POS either including sales tax where you pay the tax or as non-taxable, 0% sales tax where the 3rd party app is remitting the sales tax. This best practice will streamline back-office work and sales tax management as well as provide clean books and records for accounting or in the event of a sales tax audit.  

STATES REQUIRING 3rd PARTY APPS TO REMIT SALES TAX

January 2019​

  • Alabama
  • Connecticut
  • Iowa
  • Oklahoma
  • Minnesota
  • New Jersey
  • Pennsylvania
  • Washington

March 1, 2019

  • South Dakota

April 1, 2019

  • Washington, DC

June 1, 2019

  • Idaho
  • Nebraska
  • New York

June 27, 2019

  • Rhode Island

July 1, 2019

  • Arkansas
  • Kentucky
  • New Mexico
  • Virginia
  • West Virginia
  • Wyoming

October 1, 2019

  • California
  • North Dakota
  • Utah

January 1, 2020

  • Hawaii