Restaurant Bookkeeping Tips And Tricks For Dummies

Leverage your restaurant bookkeeping technology to keep detailed records of all outstanding invoices and payment due dates. Create a regular process, such as biweekly or monthly, for processing and approving payments and generating and mailing checks. When the report is generated, the balance sheet gives a snapshot of the restaurant’s financial position regarding assets, liabilities, and equity. It helps determine the restaurant’s financial health, make investment decisions, and provide information on the company’s financial viability to existing or potential lenders.

  1. Despite the complexities involved in running a restaurant and the unique challenges posed by the industry, maintaining seamless accounting and restaurant bookkeeping processes is achievable.
  2. The best ones must have strong general A/P features, such as purchase order (PO) tracking and vendor payment tracking.
  3. If you’re not sure which type of loan is the best fit, you may want to consult your accountant.
  4. Restaurant accounting is unique because of the language of hospitality finance.

And it is quite easy to fall behind if you don’t have the proper accounting software systems or team helping you. We have set up a resource tips guide to help clarify what are the important bookkeeping aspects to focus on for your restaurant. Regularly analyzing your restaurant’s financial and operational data is crucial for restaurant bookkeepers to help the business maintain a healthy bottom line. Key reports such as profit and loss (P&L) statements and prime cost (food and labor costs) provide valuable insights into your restaurant’s performance. Analyzing your P&L daily helps you identify strengths and weaknesses in your business and take proactive measures to address any issues. Calculating and tracking food and labor costs empowers you to optimize menu prices, manage inventory efficiently, and make well-informed staffing decisions.

Cash flow statement

You can upload your invoices to these services and they will code them by item to your various COGS and expense accounts. These services allow you to automate your accounts payable and get a more accurate COGS figure. You would then have a payment approver approve any bills they want to be paid at anytime. This allows you to manage your accounts payable completely in the cloud and the ability to pay your bills from anywhere.

However, it may not always accurately represent your financial position, as it doesn’t consider any outstanding debts or invoices. Restaurant accounting can be daunting for business owners, as there’s a lot to consider, from tax compliance to payroll, reconciliation and reporting. However, timely and accurate restaurant accounting is crucial to the success and growth of your restaurant.

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This entails reporting what you’ve withheld from employees’ paychecks for federal income and Social Security / Medicare taxes, and then paying those amounts to the IRS. If your business is subject to excise tax, that will also need to be paid quarterly. Depending on the laws in your state, you may also be required to make quarterly tax payments to the state.

That’s why we want to take you through some of the common terms, reports and processes for understanding bookkeeping and accounting for restaurants. Whether you’re curious about how to do bookkeeping, or working with a bookkeeper and accountant, this guide is here to help. Unless you’re lucky enough to own space and your own equipment outright, you’ll need to pay for your infrastructure. Utilities, cooking and cooling equipment, insurance and signage are common expenses, but you’ll also need to consider maintenance costs. Remember, servicing your commercial ovens and refrigerators will probably cost more than what you pay for your Frigidaire at home.

Importance of Bookkeeping for Restaurants

Remember, bookkeeping is not just a necessary task but a strategic tool that allows you to navigate the competitive restaurant industry and achieve your financial goals. By implementing sound bookkeeping practices, you can make informed decisions, identify areas for improvement, and ensure the financial health of your restaurant. Furthermore, accurate bookkeeping is crucial for complying with tax regulations, maintaining transparency with stakeholders, and securing funding for future expansion. It can be a lot to keep up with, which is why many restaurant owners outsource these functions to a company that offers restaurant bookkeeping services, including payroll management.

Now that you have Shogo connected to your POS, it’s time to plug it into QuickBooks Online, or your preferred accounting system. So, for this example, we’ll utilize Toast, although the setup process will more than likely be similar or the exact same for the rest of the systems. The other thing we love about Shogo is the ability to quickly and easily reconcile merchant service deposits.

Our clients love the front end of Toast and the reporting and accounting integration back end is really great for accountants. Employees are responsible for reporting tips to IRS as income and paying their share of income tax, Social Security tax, and Medicare tax via Form 1040. Note that, as previously stated, auto-gratuities such as those applied to large parties are not tips and should be treated like regular income. When making their annual tax payments, employees may find they have unreported tip income for which to account.

Some bookkeeping software brands that specifically cater to restaurants can connect directly to your POS system. In fact, depending on how old your current system is, this might be a good time to upgrade your POS system too. It shows all sources of cash, such as the amount of cash the restaurant generates from its normal business operations. It also shows all uses of cash, including operational expenses, financing expenses, and capital spent to purchase new equipment. Owners can adjust prices based on meal pricing or portion sizes by identifying items with high ingredient costs to improve profitability and reduce waste.

This is a helpful bookkeeping process that verifies every transaction across your accounts so that your ending balance matches. If your accounts don’t reconcile, it may be a sign that funds are being misused, or worse being stolen. Inventory turnover for most restaurants should be very high because you’re keeping the food fresh.

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According to the National Restaurant Association, there are 14.7 million people in the restaurant industry. Ten percent of the workforce in the United States is restaurant bookkeeping tips made of restaurant employees, most of whom are hourly and part-time. Any testimonials, statements, and opinions are applicable only to the individuals depicted.

It enables you to maintain accurate financial records, make informed decisions, and ensure compliance with tax regulations. In this article, we will provide a comprehensive guide to mastering restaurant bookkeeping within an integrated, all-in-one restaurant management platform. By following these essential steps, you can optimize your financial management processes and drive long-term success and growth for your restaurants. Despite the complexities involved in running a restaurant and the unique challenges posed by the industry, maintaining seamless accounting and restaurant bookkeeping processes is achievable. Many restaurant owners now turn to specialized restaurant accounting software to streamline and automate bookkeeping tasks.

One of the reasons we love connecting to QBO and to any restaurant POS system from Shogo is the steps and amount of time it takes. QBO has worked very well for all of our restaurant clients, so we recommend it 100% of the time. You’ll have to fill out a form with all your restaurant’s information including the name, location, and even a store code if you have multiple locations with the same name, like with a franchise.

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