Restaurant Bookkeeping Tips and Best Practices

With proper financial reports, restaurant owners can have a clear picture of whether they are in red or black. As a restaurant owner, you should be looking at the Sales versus Cost of Goods Sold ratio, and labor costs and try to keep the prime cost under 65% of the total sales. There are a few critical reports that should be evaluated on a regular basis to understand the restaurant’s finances. Understanding and tracking restaurant expenses help ensure that all the expenses related to the business are recorded, tracked, and paid in a timely manner. Prime costs include expenses such as beverages, ingredients, payroll, taxes, benefits, and more.

• They are trained to analyze your financials to identify operational shortcomings, cost leaks, and trends that require immediate or long-term action.
• Just as there is a right way to do restaurant accounting, there is definitely a wrong way.
• Many restaurant owners now turn to specialized restaurant accounting software to streamline and automate bookkeeping tasks.
• That way you can easily see where your money is going and where it is coming from and make sure that you have an appropriate amount flowing each way.

Setting up your books and then learning which entries go in which accounts is the hardest part of the process. Double-entry accounting is complicated – if it was easy there’d be a lot fewer accountants – so having it done for you can save you a lot of grief. If you go it alone, you can find sample accounts online from industry sources such as the National Restaurant Association, and most accounting programs offer sample accounts for restaurants. Even if you go that route, paying a professional to give you a few hours of instruction in how to use those accounts will save you many hours of stress and confusion. Restaurant bookkeeping can quickly become too complex for restaurant owners to handle.

Insurance

The same bottle that costs $15 in your local liquor store could cost $30 or $45 when you’re out. Record a separate daily sales entry for each day (not monthly or weekly). With this method, you are mimicking how the cash and credit card deposits hit the restaurant’s bank. Most restaurants accept credit cards and settle the batch on a daily basis. This will result in a credit card deposit or deposits hitting your bank account separately for each batch.

• “For example, you can classify your purchases as the cost of goods sold and lump all purchases together or you can drill down and break it out into wine, meats, fish.
• The overall goal with bookkeeping is to minimize operating expenses and maximize profits.
• One of the first items you will have to figure out is how to properly record your sales.
• However, QuickBooks has a variety of plans that offer different features depending on your business structure.
• We chose DAVO as our best accounting software for paying sales tax for restaurants.

The next step of an effective restaurant bookkeeping process should be to set up accounts payable correctly. Keeping your vendors happy will be important if you want them to continue to do business with you. Bookkeepers can review timecards to ensure that labor payments are accurate. As part of this responsibility, they’ll monitor restaurant payroll and income taxes so that you have proper records during the most wonderful time of year – tax season. A balance sheet spells out the restaurant’s equity, liabilities, and assets during a specified time frame. This report is used to assess the financial health of the restaurant and to forecast short-term and long-term cash flow.

Should I Outsource My Restaurant Bookkeeping?

When your chart of accounts is set up in this manner all you have to do is modify your profit and loss with the correct settings. If you are already using Toast for your POS system it makes https://simple-accounting.org/bookkeeping-tax-cfo-services-for-startups-small/ sense to consider their payroll service since your payroll data can easily be pulled from Toast. Obviously, you run into a lot fewer issues when two sister systems integrate together.

If you’re new to bookkeeping for a small restaurant, this overview will help you understand common financial tasks such as handling payroll and paying quarterly taxes. It will also cover the importance of restaurant insurance to your business’s bottom line. That’s why it’s essential to put strong bookkeeping and accounting systems in place before you open your doors. Solid restaurant accounting will help your eatery become and stay a successful business.

Best Accounting Software for Restaurants

Accounting software helps you and your accountant stay on the same page. By connecting seamlessly with your POS, accounting software automates the collection and organization of financial data and transactions. You should review your prime costs, CoGs, inventory counts, and labor on a weekly basis, not a monthly Quicken Estate and Trust Fiduciary Accounting Templates FAQs ACTEC basis. These KPIs are controllable, but they can also easily get out of hand if not monitored. If you’re monitoring these figures on a weekly basis, you can patch any cost leaks without incurring too many damages. Finally, your restaurant’s success will be measured against key performance indicators.

• This means distributing the cost among the months, not expecting to pay it all in one month.
• Once you have a sales summary you should set up a daily sales journal entry and create a memorized transaction in QuickBooks.
• This financial reporting helps you manage your cash flow, understand problems, find efficiencies and keep an eye on your restaurant’s financial health.
• TouchBistro was founded in 2010 and is used in over 100 countries.
• While long-term trend analysis is important, you should also log revenue reports on the daily and weekly.
• Any account that gets a statement with a beginning and ending balance can be reconciled.

An experienced accountant can also help you navigate the loan application process, which includes preparing financial statements and a business plan. Restaurants handle a lot of money from individual customers throughout the day. Managing money can get overwhelming and time-consuming very quickly. Restaurant bookkeeping services are an investment in your business’s financial well-being and yourself as an owner or manager. Of course, hiring professional bookkeepers also reduces the risk of error when it comes to your financial recordings.

Accrual Accounting

As they say in the business industry, leverage your strengths and outsource your weaknesses. Run the profit and loss for whatever date range you wish to look at. You can attach your statement to the reconciliation in QBO to make it easy to reference. The only drawback to Toast payroll is that right now they do not have a QuickBooks integration. While we have been inquiring about it for over a year they have yet to add this functionality. I would take a hard look at Gusto Payroll services as an alternative to ADP.