6 Accounting and Bookkeeping Hacks Every Restaurant Owner Must Know

Diligent bookkeeping and expert accounting will lay the foundation for wise business decisions for your restaurant. After you pay business-related expenses, the amount of money remaining at the end of every month equals your gross profit. Food costs refer to the cost of preparing a menu item divided by the total revenue earned from https://simple-accounting.org/bookkeeping-services-examples/ the item. This formula is used to make sure that you’re making a profit from each item you sell. Payroll can be challenging in the restaurant industry, as tracking employee hours can be quite complicated. It’s common for staff members to have multiple wages and positions, so the ability to adjust for different rates is critical.

You can use restaurant accounting software to manage all your bookkeeping needs, such as creating professional invoices, managing cash flow, and tracking time. 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.

Accounts Payable

If you live in one of the states that offer on-time sales tax discounts, DAVO will pass that on to you. For your gross profit, you’re going to subtract total expenses from total sales. This amount Intuit Bookkeeping Expert Careers Remote Bookkeeping Jobs Quickbooks Live will be the gross amount or gross profit before any deductions are taken into account. Calculating food costs will indicate whether you are making a profit from each item on the menu.

With different pay rates, irregular work hours, and multi-positions, calculating restaurant payroll can be a pain. We recommend outsourcing the payroll job or use payroll software to do the hard work for you. Restaurant accountants are trained to compile data precisely and purposefully. They can analyze your financials and identify operational flaws, unnecessary spending, and trends to pay attention to long-term. Payroll covers everything from your staff’s salaries, through to their benefits like annual leave, insurance, and federal and state taxes.

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The ideal restaurant accounting software for restaurants should offer robust reporting features, be easy to use and allow you to access data anytime, anywhere. Even for the most experienced, accomplished restaurateurs, restaurant accounting is like a foreign language. What’s the difference between accountants and bookkeepers and accountants? Restaurant accounting is a complex process with many moving parts measured against industry standards. To put it lightly, it’s pretty intimidating – not to mention time-sensitive, time-consuming, and accuracy-dependent. Even though restaurant accounting is daunting, understanding the basics is not impossible.

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. It’s important to keep track of your daily sales to monitor cash flow and understand where money is coming and going. A Point-of-Sale (POS) system can help you easily manage this process.

How to Keep Accounting Records for a Small Restaurant

That’s because there are liability issues and high penalty fees on the line for mistakes made in payroll. You need to know the money that’s going in and out of your restaurant, right? You can also largely ignore fixed costs such as utilities and lease payments, which are largely beyond your control. Your focus should be on the things that make you successful day by day. Choose a system that is easy to use for employees and customers that can seamlessly tie in with your accounting software.

It automates every step of the sales tax process and can be easily integrated with your POS. The next step up is the Growing plan for $34 per month, which includes unlimited bank transaction reconciliations, invoices, bills, and receipts. The top-tier plan is the Established plan, which costs $65 per month and also includes multi-currency reports, expenses, and project management. For more information on specific plans and pricing, contact Xero online. However, QuickBooks has a variety of plans that offer different features depending on your business structure. You can contact them via phone or through their site to discuss your business needs and budget.

Recommendations for Restaurant Accounting Software

A business strategy, organization, and the willpower to keep accurate accounting records are essential factors in determining whether or not your restaurant will get off the ground. Restaurant bookkeeping is one of the most important aspects of running a restaurant. If your restaurant has yet to get a POS system up and running, it’s time to do that now! This is used for cash and inventory management, back-office reporting, and much more.

• Long hours, high operating costs and the ever-changing landscape of regulations can make it difficult to turn a profit.
• Account reconciliation confirms that you’ve accounted for all transactions and that the amount of cash in your account is correct.
• This is the money that you need to pay to suppliers for the goods and service they provide.
• The chart of accounts includes assets, liabilities, revenue, expenses, and owner’s equity.
• However, reconciling your accounts is the only way to ensure that you have recorded all your financial transactions.

Not all industries have to deal with tips, weekly reporting periods, and hyper-sensitive labor and inventory metrics. Since accounting is complicated and the restaurant industry is unique, the professional you choose should be an expert in both. So here are the essentials of restaurant accounting and bookkeeping when it comes to reports, processes, and KPIs. Connecting your accounting software to your POS will automate the collection and organization of transactions and financial data. Along with your POS, it will help you keep a close watch on your financial performance in real-time.