Restaurant Bookkeeping and Accounting: How to do it?

If you’re opening a franchise restaurant business, such as Pizza Hut or TGI Friday’s, you’ll source your food directly from suppliers as instructed by the home office. But if you’re striking out on your own, you’ll be responsible for buying ingredients, possibly every day. Chances are you’ve noticed this already if you’ve ordered a bottle of wine. The same bottle that costs $15 in your local liquor store could cost $30 or $45 when you’re out.

You and your accountant can use your P&L to review the total revenue and expenses of your business over a period of time. Bookkeepers are more task-based and manage accounts payable, payroll, and posting journal entries. 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. While there are many great restaurant POS systems on the market we like Toast the best.

Prime Cost Calculation in QuickBooks

Based on the size of your restaurant, you can set up an inventory management system that optimizes food costs and reduces waste. Restaurant accounting is the system of recording, analyzing, and interpreting financial data for a restaurant. A restaurant accountant has many responsibilities, from recording transactions in the general ledger and accurately coding and categorizing those transactions to bank statement reconciliation and budget definition. It helps you better understand your finances, decrease expenses, increase profits, and gives you insights into your performance. Restaurant Accounting’s bookkeeping team strives to handle all the minutia so you can focus on growing your business, achieving your hospitality goals, innovating in the kitchen, hiring, etc. We understand the pressure of running a restaurant business and want to make your financials as easy as possible.

• Take the time to carefully evaluate the advantages and disadvantages before making a decision that aligns with your long-term financial goals.
• You need to analyze how funds are hitting your bank and set up your restaurant bookkeeping system to mirror that activity.
• It can free up time and resources for you and your team to focus on other business activities.
• Prime costs account for all the costs required to produce and distribute your product.
• Accurate restaurant accounting has a multitude of benefits for the success and growth of your business.

Not all industries have to deal with tips, weekly reporting periods, and hyper-sensitive labor and inventory metrics. Since accounting is complicated and the restaurant industry is unique, the professional you choose should be an expert in both. Your balance sheet also shows your equity, so your net worth; it’s what’s left over at the end of the day when assets are subtracted from liabilities. This could mean reducing operating costs or finding ways to generate more income to cover debts. Every restaurant needs a set of reports for the daily, weekly, monthly, and annual monitoring of the financial health of the business. Here is a list of the reports you’ll need for your restaurant accounting – and what they ultimately show you.

How to Avoid Common Restaurant Accounting Mistakes

QuickBooks provides functionalities for expense tracking, sales monitoring, and payroll management while facilitating integration with various POS systems. By implementing a robust system to track these KPIs, restaurant owners can gain valuable restaurant bookkeeping insights into their operations, identify areas for improvement, and make informed decisions to drive growth and profitability. If you didn’t track sales, then you wouldn’t have a clue as to how your restaurant is performing financially.

• This presents a snapshot of your current financial situation and lets you plan your short and long-term cash flow.
• You’ll also want to triple-check that taxable items reflect the correct state and local sales tax so that you collect the correct amount from customers.
• 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.
• Restaurant accounting is an essential part of running a business and has several benefits.
• It’s generally best to pair your POS system with a dedicated software-based restaurant accounting system for more robust coverage.

However, it may not always accurately represent your financial position, as it doesn’t consider any outstanding debts or invoices. Bookkeeping tracks and organizes a company’s financial transactions, such as sales, purchases, payments, and receipts. These transactions are recorded in journals and ledgers and are then summarized into financial statements.

Automate Your Restaurant POS with QuickBooks Online

These employees may then share or give a portion of their tips or gratuities to food runners, bussers, hosts or other staff members that contributed time and effort during the shift. It helps assess the efficiency of food purchasing, inventory management, portion control, and pricing strategies. By tracking food cost percentages regularly, restaurants can identify potential wastage or overpricing issues affecting profitability. The income statement summarizes a restaurant’s revenues, expenses, and net income or loss over a specific period. It provides a snapshot of the business’s profitability by comparing total sales and costs. Caryl Ramsey has years of experience assisting in different aspects of bookkeeping, taxes, and customer service.

• In addition to providing outsourced bookkeeping and payroll services, we also have a full a service tax, accounting division to help you keep more money in your pocket and less in Uncle Sam’s.
• She holds a Bachelor’s degree from UCLA and has served on the Board of the National Association of Women Business Owners.
• Outsourcing payroll services or automating the process with an integrated restaurant management platform ensures accuracy and compliance, saving time and reducing the risk of penalties.
• And in the restaurant business, it’s no secret that, in order to make food, you’ll have to buy ingredients.