Learn the Essential Aspects of Restaurant Accounting

what kind of records should i keep tabs on your food costs will help you set menu prices and maximize profits. Food costs depend on the type of restaurant, but normally are around 28-35% or revenue. Prime costs is the sum of your restaurant’s costs to sell its food, drinks and products—your COGS as mentioned above—plus the labor costs of your salaried and casual staff. Industry averages suggest your prime costs should be between 55% and 60%. Whether you’re curious about how to do bookkeeping, or working with a bookkeeper and accountant, this guide is here to help. Restaurant bookkeepers typically don’t have accounting backgrounds.

Recording, approving and paying your vendors – also known as your accounts payable – is both time consuming and error prone, but it is key to maintaining positive relationships with vendors. Your sales data can be used to help you automate parts of your inventory management, updating inventory counts as food and drink items are sold. Your profit is the money that’s left over after you’ve accounted for your COGs, labor, rent, equipment, utilities and all other operating expenses. Finally, your restaurant’s success will be measured against key performance indicators. KPIs are what you’ll obsess over as a business owner – they dictate the financial outlook of your restaurant. You can’t run your business without staff, which means you need know they’re being paid accurately and on time.

It can be extremely overwhelming which is why we don’t suggest you try to do it with a pen and paper. Accounting and bookkeeping software make this process so much easier. You can link your accounting software with your point-of-sale system , enter just a few sets of numbers, and then generate reports for each of the categories mentioned above, plus a whole lot more. Outside of hiring someone else to crunch the numbers, using a software program is your best bet for effective restaurant accounting.

Gross profit

A standard chart of accounts includes assets, liabilities, expenses, revenue, and owner’s equity. What makes restaurant accounting unique is the language of hospitality finance. For efficient accounting, you need to understand the ins and outs of how the food and beverage industry. No matter how busy the restaurant is if costs are too high, tight margins mean you can fail. This means designing a profitable menu, scheduling staff to match demand, tracking waste, checking inventories, and establishing an ordering system that avoids spoilage.

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That means https://bookkeeping-reviews.com/ numbers are always up-to-date and reflect, in real time, item and product levels. Bar inventory software like BinWise Pro makes perpetual inventory a reality for bars and restaurants across the country. Most restaurants use the cash method, while most other businesses use the accrual method. Restaurants have expenses and transactions that are unique to them.

Infor Financials & Supply Management

Talk with other restaurant owners about what accounting practices have been working for them. Your restaurant bookkeepers are crucial to the success of your restaurant finances. While they might only execute basic bookkeeping tasks, it’s imperative that they do so accurately and efficiently. When they understand how their work affects the overall financial health of your restaurant business, they become more valuable to your organization. To ensure they’re the very best they can be at their jobs, it’s important that restaurant bookkeepers understand how restaurant accounting differs from accounting in other industries. If they’ve come from a manufacturing or retail accounting background, for example, restaurant accounting may seem foreign to them.

Your restaurant bookkeepers are most likely responsible for entering those manual due to/from entries, but do they understand the importance of these intercompany entries or why they’re doing them? If you have multiple restaurants, all of which are their own legal entities, your restaurant bookkeepers must grasp why it’s necessary to accurately track these intercompany entries. Accounting software helps you and your accountant stay on the same page.

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If a business’s sales are less than $25 million annually, they can choose between the cash or the accrual method. If a business’s sales exceed $25 million annually, they must use the accrual method. Restaurants that have taken advantage of our outsourcing services enjoy a variety of benefits, one being that their finances are invariably in order, easily accessible, and accurate all the time. We follow industry-standard accounting practices & processes to help you obtain greater control & accountability and remain in compliance with regulations. We can help you get time to focus on business strategy, customer support, core operations, and increasing ROI by handling your accounting functions.

Left unchecked, a month of higher prices could cause preventable losses topping many thousands of dollars

Outsourcing your payroll is a surprisingly affordable option to ensure your accounting is consistent and reliable. By hiring a professional payroll service, you can not only ensure you are obeying regulations, but you can also save hours of your time every pay period. This automation replaces the need for manual data entry, automating general ledger entries and reducing the time and errors in your bookkeeping.

Yes, you can use a bookkeeper or an accountant to do your books on a daily, weekly, or monthly basis, but on a quarterly basis, you should have a professional review your books. A CPA should be advising you to look at your numbers, see what your quarterly taxes should be and what decisions you might make to reduce your tax liability to make life easier for you. It doesn’t matter if they’re charging you $2,000, $3,000 or $10,000, they should be exceeding that when it comes to your taxes and looking at your business on a quarterly basis. As you get more comfortable with learning the ins and outs of restaurant accounting, talk with your bookkeeper, and ask for a breakdown.

Access all Xero features for 30 days, then decide which plan best suits your business. That includes those extra bottles of milk to make closing-time coffees. Process every receipt, so you’re not out of pocket when it’s time to offset your expenses against tax.

It allows you to document all financial transactions of your business and determine its performance. Timely and accurate restaurant accounting is crucial to ensure you’re always on top of your numbers, so you can remain profitable and invest in business growth. Your restaurant group is generating data through technology like point of sale systems, restaurant management software, and staff scheduling tools, and you’re using this data to drive smart decisions. While you know the difference between restaurant reporting and restaurant analytics, your restaurant bookkeepers may not. When it comes to restaurant accounting, the chart of accounts categorizes the money you spend and receive. The chart of accounts records high-level transactions like revenue, expenses, assets, liabilities,cost of goods sold, and equity.

Let RRB help you save TIME and MONEY

With organized financial practices and relevant, sophisticated reporting, bookkeeping can help you create a strong foundation for your business decisions. Bookkeeping involves day-to-day finances and budgets, but effective bookkeeping practices also can help you make operational decisions about food, labor, and overhead costs. Perhaps you’re behind on reconciling your bank statements, need better systems or documentation or would like to devise a more effective way to manage your cash flow. Get in touch with SLC Bookkeeping, where our project consultants have the expertise you need to get you where you need to be.

Your financial statements deserve strict attention to detail and precision. When it comes to restaurant accounting, Robertson is the leading provider of outsourced bookkeeping services because we understand that business owners do not have room for error. Our team of professionals is highly experienced and will consult with you to come up with a financial plan that will work for you.

If the whole thing is just too confusing for you, or bookkeeping is too complex to manage, an accountant can handle it for you. Even if you’ve got a good grasp on the entire bookkeeping process, a professional accountant can help you interpret the information that your accounting produces. With our weekly and monthly reports, you have a full understanding of your restaurant’s financial position. And, ideally, you’ve got restaurant accounting software that quarterbacks the whole thing in a centralized dashboard. A prepaid expense is a type of account that shows up on a balance sheet because a business made advance payments for services or goods rendered or received in the future.

You will see how your revenue, prime costs, and expenses compare against all of our other restaurants clients. Because we provide bookkeeping for restaurant clients only, we are able to provide specific real-time financial insight into revenue, cost of goods, and expense trends. BinWise Pro is an industry-leading beverage inventory management software that streamlines procurement and accounting. Point is, bars and restaurants need to account for vendor credits and whether or not they’re short paying and when. Accurately keeping tabs on all these credits keeps the risk of vendor dispute low and gives you more clarity into your business’s financial health.

Connect with industry peers and the Restaurant365 team to share innovative ideas. See how the restaurant industry is using technology to continually improve. Stories of how restaurants of all shapes and sizes succeed with Restaurant365. Restaurant365 seamlessly connects with leading vendor, technology, channel, and service partners to put your business in one place, one click away.

By giving up accounting, bookkeeping and payroll, you buy back time to focus on your business. So instead of doing the work, outsource the task and then use those numbers to lead your business forward. Due to the volatility of variable expenses and contrasting changes they can have from month-to-month having documented reporting and screening of these costs is crucial to keeping your business afloat. Use our restaurant management software to keep an eye on variable costs and study their changes. They can diminish or increment quickly, cut your net revenues and result in a precarious shortfall, or show a substantial gain to your profit depending on the variables in place. Pay your taxes.Part of the reasoning behind hiring an accountant is ensuring you correctly track your taxes.

Here are some of the specific tasks that restaurant bookkeepers tackle. By tracking each of these key financial numbers, you can paint a clear picture of how your venue is performing and understand which areas of your business are working well and which may need improvement. It’s essential to regularly track and update your P&L every month, quarter and year. This will help to highlight how your restaurant is performing and to see if any new initiatives have positively or negatively impacted your finances.