A Step-by-Step Guide to Bookkeeping for Restaurants

Streamlining the accounts payable process into an AP automation allows you to quickly capture paper and electronic invoices and route them through customized workflows for approvals. Once the invoices are processed, payments can be sent directly and securely through the same dashboard. AP automation is particularly important for growing restaurant companies that need to scale up operations without greatly increasing accounting overhead.

A restaurant profit and loss statement, or P&L, keeps all restaurant accounting information organized in one concise document. Along with your POS, accounting software helps you keep an eye on your financial performance in real-time. It also eliminates the time, effort, https://simple-accounting.org/difference-between-bookkeeping-and-accounting/ and many of the errors inherent to manual accounting processes. Because recording income ahead of expenses makes your restaurant seem more profitable than it is. Four-week periods, on the other hand, are always 28 days with four Fridays and four Saturdays.

Record Sales Through Your POS Daily

This will also help you avoid food surpluses and shortages, and instead strike a more accurate balance. This is the money that you need to pay to suppliers for the goods and service they provide. That’s everything from your delivery partners, to utilities and broadband internet, right through to rent for your premises. 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.

Using restaurant accounting tools can help you track any incorrect deposits, lost invoices, or sales discrepancies. Caryl Ramsey has years of experience assisting in different aspects of bookkeeping, taxes, and customer service. She uses a variety of accounting software for setting up client information, reconciling accounts, coding expenses, running financial reports, and preparing tax returns. She is also experienced in setting up corporations with the State Corporation Commission and the IRS. Xero is a cloud-based small business accounting program that’s often considered as an alternative to QuickBooks Online. It was founded in 2006 in New Zealand and is used around the world.

How NEXT helps restaurants thrive

They are trained to analyze your financials to identify operational shortcomings, cost leaks, and trends that require immediate or long-term action. While daunting, learning what you need to know about restaurant accounting is not insurmountable. And when you do, you can reap the many benefits of finance-driven business decisions. 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 the item.

The fixed expenses comprise rent, equipment costs, insurance, permits, etc. Tracking and paying these expenses helps the restaurant remain financially solvent and compliant with applicable laws and regulations. Additionally, having accurate records of expenses can help restaurants create accurate budgets, identify waste areas, and examine opportunities for cost savings. Bank reconciliation is essential to ensure your bookkeeping records match your bank accounts, payroll liabilities, lines of credit, loans, and credit cards. If you are not using financial reporting for your restaurant, then you are running your business blind. With such tight profit margins in the restaurant industry, it is important to analyze your financial reports on a regular basis.

Sales Forecasting

While this may not be the simplest, many restaurants prefer this method because it gives them a more accurate picture of their income and expenses. DAVO was created in 2001 as a way to remedy pain points between the payee and the payor. It automates every step of the sales tax process and can be easily integrated with your POS. It offers a free option with limited features and paid plans that include more robust features. It can be used by owners with beginner-level accounting knowledge and those with a more advanced understanding of accounting. It can be integrated with your POS and bank and offers payroll services.

Plate IQ will help you spend less time processing invoices, do bill pay easier, and gain more insight from invoices. If you want to boost productivity, work quality, AND save on labor cost — automating more of your bookkeeping is critical. Hiring a CPA will help your restaurant business solvency Charles Kurk Professional Bookkeeping Services and reduce your risk of tax issues down the line. Think of bookkeepers like the line cook and a strategic accountant as the chef. We proudly provide all the in-person and virtual services you need to take your business and your life to the next level without stress, overwhelm, or outlandish fees.

How To Master Restaurant Bookkeeping in Five Steps

Accounting software also takes away the cumbersome burden of manual accounting while eliminating the effort, time, and errors that come with it. The chart of accounts helps organize your financial transactions in categories that will give clear insight of your restaurant’s financial health. Food cost percentage shows how much of your overall sales are spent on ingredients and food supplies.

• When you enter incorrect information into your books, you’re also skewing financial reports and KPIs.
• With running a restaurant business, you’ve got a lot on your plate.
• Finally, your restaurant’s success will be measured against key performance indicators.
• Industry averages suggest your prime costs should be between 55% and 60%.
• It should give an accountant a rough bird’s eye view of what’s involved in your operations in terms of sales and costs.

Categorised in: Bookkeeping

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