5 Restaurant Bookkeeping Tips for Your Business Growth

Once the bookkeeping falls behind, it can be extremely difficult to catch up. Many business owners make the mistake of scheduling time for all their restaurant bookkeeping responsibilities on the same work day. While this might sound like a good way to get all the bookkeeping done quickly, this can actually be less efficient. The next step is to set up your chart of accounts which is used to categorize the money flowing in and out of your business. A standard chart of accounts includes assets, liabilities, expenses, revenue, and owner’s equity. We recommend brand-name products, such as QuickBooks, because they offer specialized modules that are specifically meant for restaurant accounting.

Many restaurants use an accounting solution to generate necessary reports. Among the most popular ones is QuickBooks Online, where you can effortlessly auto-generate many essential reports. Paying attention to accounts payable and paying the bills on time is what helps you keep long-lasting working relationships with your vendors. One thing that makes it particularly tricky is that so many pieces are moving, you often have to hire new people and account for damages which occur from time to time.

Restaurant Accounting Considerations

Food cost, or liquor cost in bars, is an important expense ratio in the context of restaurant accounting. That’s because it’s calculated by taking the cost of all the ingredients needed to make the item once. That’s also why perpetual inventory is the best type of inventory management for bars and restaurants. Since your POS logs revenue coming in and much of the money going out of your restaurant , you can use it to analyze sales and costs. Accounting software helps you and your accountant stay on the same page. By connecting seamlessly with your POS, accounting software automates the collection and organization of financial data and transactions. To miskey numbers when you’re entering row upon row of data is also human.

• If you are cutting checks for your bills you want to make sure to print checks from QuickBooks.
• That’s because it’s calculated by taking the cost of all the ingredients needed to make the item once.
• BookKeeping Express will take care of your finances so you can prepare for service.
• Fully-trained bookkeepers manage account records, produce financial reports, and monitor revenue, spending and invoices.
• This will create a rhythm to updating your inventory and cost of sale, while also providing an indicator of waste.
• In other words, both a gas station and a bar want to record and analyze all their transactions.

You can lose a lot of money if you’re not collecting payment in full on customer food orders. A bookkeeper will track your expenses and make deposit slips at the close of business each day.

Restaurant accounting tips

At any given moment, you peek at your sales-to-labor ratio or determine if sales are meeting historical averages. restaurant bookkeeping These financial snapshots give you the power to take action, in real-time with minimal effort.

• Industry averages suggest your prime costs should be between 55% and 60%.
• These financial snapshots give you the power to take action, in real-time with minimal effort.
• Software as a service companies are dynamic online businesses that sell software subscriptions instead of one-time purchases or digital downloads.
• Labor costs includes the amount spent on bussers, servers, hosts, and anyone else on your payroll.
• It’s critical that a restaurant records sales every day and that cash and credit card sales are reconciled against bank account deposits to ensure that payments are made correctly.
• So is failing to recognize meal discounts or mis-logging sales as revenue.

You need to decide if they‘re going to be pooled, paid by paycheck, or in cash. We’re going to take a look at some restaurant accounting basics as well as some factors that are specific to restaurant accounting. Having knowledge about restaurant accounting is important if you are involved in any of the behind-the-scenes activities at a restaurant. You https://www.bookstime.com/ should be able to interpret the data to know what is going on so that everyone who has an active role in making the restaurant successful is on the same page. Using this report will likely release you from the need of running separate COGS and labor cost reports. Most restaurants use the cash method, while most other businesses use the accrual method.

How to do Bookkeeping for a Restaurant

Getting into the habit of these best practices is often the hardest part. Just like your cleaning process and ongoing training programs, it’s all about repetition and making recording the financials a part of your regular routine as a business owner. Some bookkeeping software brands that specifically cater to restaurants can connect directly to your POS system.

• He started in the dish pit and worked his way up to management, where he helped several restaurant owners cut their costs, effectively manage their staff, and fine tune their operations.
• For instance, what is the difference between accounting and bookkeeping?
• However, if you need in-depth accounting services, you will need to integrate with QuickBooks or choose another restaurant accounting software.
• We reviewed a dozen leading small business accounting software programs and chose the best for restaurants based on features, price, ease of use, and integration options.
• For other accounting software suggestions, check out our guide to the best small business accounting software.
• What role does an accountant play in a restaurant, among other questions.

The method also gives restaurants a more accurate understanding of their income and expenses. The cash accounting method the easier one for restaurants, but not always the most accurate. The method records income as it enters your bank account and expenses when they are paid. However, tracking income before expenses will make your restaurant seem more profitable than it actually is. Restaurants have KPIs, reports, and business and tax structures that are unique to the restaurant industry. Not all industries have to deal with tips, weekly reporting periods, and hyper-sensitive labor and inventory metrics.