1099-K 2025 for Restaurants & Franchises

If you run a restaurant, a franchise, or any multi-location concept, Form 1099-K isn’t just “another tax form.” It’s the reconciliation backbone for a big portion of your sales—delivery apps, online ordering, card readers, and marketplaces. The rules have changed (again), so here’s the plain-English version of what matters for tax year 2025—and how to stay audit-ready without losing a weekend to spreadsheets.

First, what is a 1099-K—and who sends it?

Form 1099-K is an IRS information return that reports gross payments you received for goods or services via:

• Payment cards (credit, debit, gift cards processed by your merchant processor), and
• Third-party settlement organizations (TPSOs) such as payment apps and online marketplaces (think Stripe, Square, PayPal, Venmo business profiles, Shopify Payments, DoorDash, Toast Online Ordering, Uber Eats, ticket platforms, etc.).

Two key points most owners miss:

1. Card payments have no threshold. If you accept card payments, your processor sends a 1099-K regardless of the amount.
2. Friends/family reimbursements (non-business) shouldn’t be on a 1099-K—label them correctly in the app.

The thresholds changed—again. Here’s the current law.

• Tax year 2024 (forms arriving by Jan 31, 2025): TPSOs must issue a 1099-K if gross payments exceed $5,000 (no transaction count).
• Tax year 2025 and beyond: Congress passed the One Big Beautiful Bill Act (OBBBA) on July 4, 2025 (Public Law 119-21). That law reverted TPSO reporting to the pre-ARPA rule: $20,000 AND 200 transactions. In other words, for 2025 activity (forms issued in Jan 2026), most platforms go back to the $20k/200 standard.

Bottom line: 2024 = $5,000; 2025+ = $20,000 & 200 txns (TPSOs). Card payments still report with no threshold. IRS+2IRS+2

Quick reference table

Tax year	Card payments (merchant processors)	Payment apps/marketplaces (TPSOs)
2024	No threshold – always reported	>$5,000 total payments (no txn minimum)
2025+	No threshold – always reported	>$20,000 AND ≥200 transactions (per OBBBA)

Sources: IRS news/FAQs & OBBBA (Public Law 119-21).

Do I owe tax only if I get a 1099-K?

No. All business income is taxable whether or not you receive a 1099-K. The form is just third-party reporting; it is not your profit. You still deduct fees, refunds, chargebacks, discounts, comps, shipping, and other allowable expenses to arrive at taxable income.

Why 1099-K creates headaches (and how to prevent them)

Because 1099-K shows gross sales, it rarely matches your P&L without adjustments. Here are the pain points we clean up most for restaurants and franchises:

1. Gross ≠ deposits. Processors report gross; your bank shows net after fees, refunds, and chargebacks. If you don’t split those items in the ledger, tie-outs are impossible.
2. Mixed personal payments. Owners sometimes use the same app for business and personal. That’s how non-business transfers end up on a 1099-K—avoid it by keeping profiles and bank accounts separate and tagging personal payments correctly.
3. Multiple platforms. It’s common to receive several 1099-Ks (e.g., Stripe for your site, Toast for POS, DoorDash for delivery). Each one must reconcile to your sales sub-ledgers by channel.

A restaurant/franchise-ready reconciliation workflow

Follow this and you’ll sleep better come January:

• Centralize by channel. Maintain sub-ledgers for in-house POS, delivery apps, and web/e-commerce.
• Record “gross” first. Post sales gross by day (or batch), then book processor fees, refunds, chargebacks, tips paid out, and sales tax as separate lines so your totals can match the 1099-K and your bank.
• Use platform reports monthly. Download monthly summaries from Stripe/Square/Shopify/Toast/DoorDash and tie them to your GL before month-end close.
• Close with a short checklist:
  • Match gross per platform to your sales sub-ledger.
  • Confirm fees and refunds are posted to the right expense/contra-revenue accounts.
  • Verify bank deposits equal net activity.
  • Flag any personal or non-business transfers and keep them out of business books.

If you’re building these controls from scratch, our guides on restaurant COGS and restaurant financial statements show how to structure accounts for clean tie-outs.

1099-K timing: what to expect

Payers must send your 1099-K by January 31 for the prior calendar year. If an amount looks off, do not ignore it—reconcile and request a corrected form when needed. (And if you truly received a form in error, the IRS outlines how to address it on your return with offsetting entries.)

Special call-outs for 2025 planning

• Plan around the new law (OBBBA). For 2025, many SMBs will not receive 1099-Ks from TPSOs unless they cross both $20,000 and 200 transactions—but card transactions remain reportable with no threshold. This reduces paperwork for some, but it doesn’t change your duty to report all income.
• Keep your year-over-year rules straight. 2024 used the $5,000 TPSO threshold; 2025 reverts to $20k/200. If you’re reading older articles citing a $2,500 threshold for 2025, that was pre-OBBBA guidance and is now superseded by law.
• Separate personal from business—now. It’s far easier to set up clean app profiles and bank accounts than to unwind mixed payments at tax time.

For a broader look at 2025 changes affecting owners, bookmark our new 2025 Tax Law Adjustments for Franchise & Restaurant Owners post.

Year-end checklist (save this)

1. Export 2025 reports from each platform (monthly and YTD).
2. Reconcile gross to GL; book fees/refunds/chargebacks separately.
3. Verify bank deposits by batch/date.
4. Document any non-business inflows.
5. Archive support: merchant statements, chargeback notices, app CSVs.
6. Schedule a pre-filing review to catch mismatches before January 31 statements land.

If you’re scaling, you may also like Franchise Tax Preparation: What Every Owner Must Know and Franchise Accounting Services to Maximize Multi-Location Profitability for systemizing multi-unit financials.

How QMK Consulting helps (and why business owners call us before January)

QMK Consulting is an accounting firm in New York City that specializes in franchise accounting and restaurant accounting. We build the month-end workflow that makes 1099-K reconciliation a non-event—clean sub-ledgers, accurate fees and refunds, airtight bank tie-outs, and documentation that stands up to scrutiny. Then we translate that clean data into decisions: pricing, menu mix, labor vs. throughput, capex timing, and cash flow strategy. See also our post Boost Restaurant Profit Margins for practical levers you can pull right away.