Resale Certificate for Caterers: Buy Food, Supplies, and Equipment Tax-Free
Catering is a food service business, and sales tax rules for caterers are more complex than for a standard retail store. The core question: is catering a service (preparing and serving food) or a sale of tangible property (the food itself)?
Most states treat catering as a sale of food, which means the food you serve is subject to sales tax at the prepared food rate. This also means your purchases of food ingredients and disposable serving supplies qualify for the resale exemption, since those items become part of the product you sell to your clients.
A mid-volume catering company purchasing $15,000 to $40,000 per month in food and disposable supplies saves $12,600 to $33,600 per year at 7% tax.
How States Tax Catering
This matters because it determines what your resale certificate covers.
Majority rule: catering = sale of prepared food. In most states, the catering charge (food, preparation, and delivery) is treated as a sale of tangible personal property (food). Sales tax applies to the total charge. Because you are selling food, you can buy the ingredients tax-free with a resale certificate. This is the rule in California, Texas, New York, Florida, and most other states.
Service charges and gratuity. Mandatory service charges (18-22% added to the invoice) are generally taxable because they are part of the total price. Optional gratuities that go directly to staff are generally NOT taxable. The distinction between mandatory "service charge" and optional "gratuity" matters for tax calculations.
Separately stated labor. A few states allow caterers to separate food cost from labor/service charges, with only the food portion being taxable. This is uncommon and state-specific.
Rental charges. If you rent linens, chafing dishes, tables, and chairs to clients, the rental income may be taxable separately from the food sale. Some states tax equipment rentals; some do not.
What You Can Buy Tax-Free
Because catering is a sale of food in most states, the ingredients and disposable items that become part of your product qualify as resale:
- Food ingredients (proteins, produce, dairy, grains, oils, spices)
- Beverages (coffee, tea, juice, soda purchased for client events)
- Disposable plates, bowls, and cups (go to the client's event, not returned)
- Disposable utensils (forks, knives, spoons, serving spoons)
- Napkins and tablecloths (disposable ones provided at the event)
- Disposable serving trays and chafing dish pans
- Takeout containers and to-go packaging
- Straws, stirrers, and cocktail picks
- Food packaging (plastic wrap, foil, to-go bags used to package food for the client)
- Condiments and sauces (ketchup, mustard, dressing packets served to guests)
- Ice (purchased for client events)
- Garnishes and decorative food items (edible flowers, parsley, lemon wedges)
What You CANNOT Buy Tax-Free
| Item | Why It Is Taxable |
|---|---|
| Commercial kitchen equipment (ovens, ranges, refrigerators) | Business equipment |
| Reusable chafing dishes and serving equipment | Business equipment |
| Reusable linens (laundered and reused) | Business property |
| Catering van or delivery truck | Business asset |
| Cleaning supplies for your kitchen | Business use |
| Staff uniforms | Business expense |
| Fuel for cooking (propane, sterno not sold/transferred) | Consumed in service |
Sterno and fuel canisters. This is a gray area. If you place a Sterno can under a chafing dish at the client's event and it stays at the event (single-use, left behind), some states treat it as a disposable supply transferred to the client (resale). If you bring your chafing equipment and Sterno back to your kitchen after the event, the Sterno is consumed in providing a service (not resale). The determining factor is whether ownership of the item transfers to the client.
Reusable vs. disposable. The dividing line is clear: disposable items that go to the client and are not returned are resale (plates, cups, napkins). Reusable items that you bring back to your kitchen (serving platters, chafing dish frames, linens you launder) are business equipment.
Where Caterers Buy Wholesale
- Sysco (the largest foodservice distributor in North America)
- US Foods (second-largest broadline distributor)
- Performance Food Group (PFG) (growing national distributor)
- Restaurant Depot (cash-and-carry for foodservice professionals)
- Costco Business Center (designed for food service operations)
- Local produce distributors and farmers (seasonal, local sourcing)
- Specialty distributors (seafood, meat, bakery, ethnic foods)
- WebstaurantStore (online foodservice supplies and disposables)
- Dart Container, Georgia-Pacific, Pactiv (disposable supplies manufacturers)
All of these require your resale certificate for tax-exempt purchasing on resale items. Restaurant Depot specifically requires proof of a food service business (resale certificate, business license, or food handler's permit) for membership.
Alcohol and Catering
If your catering business serves alcohol at events:
Alcohol purchases. You need a liquor license (or catering alcohol permit, depending on your state) in addition to your resale certificate. The resale certificate covers the wholesale alcohol purchase. Alcohol is subject to excise taxes separately from sales tax.
Markup and tax on alcohol. Most states tax alcohol sales. Some states have higher tax rates on alcohol than on food. Your invoice to the client should distinguish food charges from alcohol charges if the rates differ.
BYO/client-provided alcohol. If the client provides their own alcohol and you only provide bar service, you are providing a service (bartending). The client owns the alcohol. Your resale certificate does not apply to alcohol the client bought.
Dollar Savings
| Catering Size | Monthly Food and Supply Purchases | Annual Tax Savings (7%) |
|---|---|---|
| Small/home-based caterer | $5,000 | $4,200 |
| Mid-volume catering company | $20,000 | $16,800 |
| Large event caterer | $50,000 | $42,000 |
| Multi-unit catering operation | $100,000+ | $84,000+ |
Common Mistakes
Paying tax on disposable supplies. Plates, cups, napkins, and utensils that go to the client's event are resale items (they are part of the catered product). Some caterers pay tax on these because they think of them as "supplies" rather than part of the food sale.
Not collecting tax on mandatory service charges. If your invoice includes a 20% mandatory service charge, that amount is taxable in most states. Only truly optional gratuities are typically exempt.
Confusion between grocery food and prepared food rates. Ingredients you buy at wholesale are purchased for resale (no tax with certificate). The prepared food you sell to clients is taxable at the prepared food rate, which is often higher than the grocery rate. Your POS/invoicing needs to charge the correct rate.
Not separating rental income. If you rent tables, chairs, and linens to clients, the rental charge may be taxable at a different rate or under different rules than the food sale. Track these separately.
How to Get Started
- Apply for your resale certificate through your state or our service.
- Open accounts with foodservice distributors. Sysco, US Foods, and Restaurant Depot all require the certificate for tax-exempt purchasing.
- Understand your state's catering tax rules. Determine whether service charges, delivery fees, and equipment rentals are taxable in your state.
- Set up your invoicing correctly. Separate food, service, alcohol (if applicable), equipment rental, and gratuity as distinct line items.