Grocery and convenience stores
Accounting for Chicago Grocery and Convenience Stores
Two sales tax rates, lottery commissions and tobacco stamps.
Common mistakes in this industry
- The state grocery tax ended on 1 January 2026, and municipalities are allowed to adopt their own in its place. The rate on food now depends on where the store sits.
- Lottery is commission income, not a sale. Running the full ticket value through revenue inflates sales and the tax base with it.
- Cigarette and tobacco stamps are a purchased asset before they are a cost, and stores routinely expense them on the wrong date.
- Owner withdrawals taken from the till rather than the bank are the single most common reason a store cannot produce statements for a lender.
Grocery or corner store
Frequently asked questions
What sales tax rate applies to food in my store?
The state ended its 1% grocery tax on 1 January 2026 and allowed municipalities to impose their own 1% tax on the same goods. Whether food in your store is taxed now depends on the municipality. Candy, soft drinks and prepared food have always been taxed at the general merchandise rate rather than the food rate.
How should lottery sales appear in the books?
Ticket sales are money held on behalf of the state, and only the commission is your income. Recording gross ticket value as revenue overstates sales, distorts every margin figure and creates a sales tax question you should never have to answer.
The state sent a notice about my sales tax. What now?
Send it to us. Most store notices come from a mismatch between reported sales and third-party data, and most resolve with a reconciliation showing where the difference sits. We answer the notice, and we fix whatever produced it so the next one does not arrive.
Can I pay staff in cash?
You are allowed to pay wages in cash, and you still owe the same withholding, the same quarterly returns and the same year-end wage statements. Paying cash without running payroll is what turns a small audit into an assessment with penalties.
