Restaurant Bookkeeping and Accounting Explained
This approach can be implemented using manual ledgers, spreadsheets, or accounting software. Make sure the system you choose is well-organized and simple to use. It might be challenging to manage the finances of a restaurant owner. Restaurant bookkeeping is essential to managing your finances and ensuring your restaurant is profitable.
Account for all transactions, reconcile all accounts, and generate monthly reports so that you can track and analyze the key elements that indicate how well the restaurant is performing financially. Make sure you have a point-of-sale system that easily integrates with that software. The chart of accounts helps organize your financial transactions in categories that will give clear insight of your restaurant’s financial health. You can choose between cash basis accounting and accrual accounting depending on your profit amounts.
Get payroll running smoothly
To do this, you can try a process called the “Three-Way Match.” To begin, view your restaurant’s purchase order, then the receiving order, and lastly, the vendor invoice. As a restaurant owner, you spend your days dealing with inventory management, staffing, and controlling the cost of goods sold. An expert accountant frees you of the burden of complex financial analysis and monotonous daily tasks that would distract your focus from managing restaurant operations.
While you won’t leave this article a chartered accountant, we’ll give you the language you need to work with accountants and with restaurant accounting software. In other words, we’ll help you talk the talk, but you’ll still need someone to walk with. Now make sure to reconcile all bank accounts, merchant clearing accounts, credit cards, loans, lines of credit, and payroll liabilities every single month. You should reconcile bank accounts, credit cards, loans, lines of credit, and payroll liabilities. Restaurant accounting software can help you to manage your books and records yourself. Going with the right software may even help you save money in the long run.
How To Start And Grow Your Restaurant Business
If your restaurant follows the accounting period, which is recommended, you’ll have 13 accounting periods in a year. Just like keeping track of orders, oven temperatures, and the right amount of salt, you have several things to track when doing accounting for your restaurant. If you were to use a calendar year accounting period, for example, you’d have to compare longer months with shorter months, and sometimes one day can make a big difference. Reconciling accounts will make you aware of incorrect deposits, cash variances, lost checks, and more. With different pay rates, irregular work hours, and multi-positions, calculating restaurant payroll can be a pain.
- Our clients love the front end of Toast and the reporting and accounting integration back end is really great for accountants.
- This P&L gives you all your income and expenses and whether you are profitable or not,” said Miller.
- Schedule a demo of our restaurant management system today to discover which features and modules will work best for your business.
- Food costs refer to the cost of preparing a menu item divided by the total revenue earned from the item.
- We offer our toolkit of financial intelligence that will be your greatest asset for business growth.
- At SynergySuite, we plug into your restaurant’s bookkeeping operations, so your business runs smoothly.
Payroll is responsible for calculating and distributing employees’ paychecks. Payroll also keeps a financial record of deductions, bonuses, vacation, sick time, and overtime. If you’re working with a firm, you can control accounting costs by ensuring that junior accountants handle the menial tasks, and your CPA completes the hard analysis. Working with a remote bookkeeping service will still provide you with all the value you could get from an in-office bookkeeper but at a fraction of the cost. I have even seen some restaurants make Payroll a subaccount of COGS. Just make sure you keep a Payroll parent with the subaccount breakdown.
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For smaller and medium-sized food establishments we can also serve as an outsourced CFO or controller. The New York City restaurant dining and beverage industry is fiercely competitive, and restaurant owners and hospitality groups face a diverse range of complex regulatory and accounting challenges. As a restaurateur, hotel, or food and beverage operator, you know that the guest’s experience with your brand has a direct effect on your success. Holding to your vision in a competitive, margin-sensitive industry is critical. You can integrate your POS system with the restaurant management software.
Once your tip policy is set up, you should document and distribute it to every staff member when they get hired. Make sure it is clearly outlined with your restaurant’s process for handling bookkeeping for restaurant tips and how exactly employees are expected to report them to the IRS. Also, to protect yourself and your business, your policy should include a grievance process when a problem may arise.