Calculating and tracking food and labor costs empowers you to optimize menu prices, manage inventory efficiently, and make well-informed staffing decisions. Reconciling your accounts is the only way to know that you have accounted for all transactions, and it makes you aware of incorrect deposits, lost checks, and cash variances. You should reconcile all bank and credit card accounts, loans, lines of credit, and payroll liabilities.
So it can be concluded that restaurant bookkeeping is an initial step in the accounting procedure. If all the business transactions are recorded properly then there is a good chance of the later accounting processes being followed in the right manner. All the major financial decisions of a restaurant are taken on the basis of the accounting records rather than bookkeeping records as accounting shows the correct financial position of the business. Depending on your sales volume and the tasks you need help with, your bookkeeper may only work on your records a couple of hours a day or week. Ideally, you’ll want a bookkeeper who is familiar with the restaurant industry. Typically, they’re happy to send their bookkeepers more work if they can accommodate it.
Profit and Loss (P&L) Statement
Reconciling QuickBooks accounts is the single most important piece of the entire bookkeeping process. Reconciling your accounts is the only way to know that you have recorded all of your financial transactions. You need to reconcile all of Restaurant bookkeeping your accounts not just your bank accounts. You can upload your invoices to these services and they will code them by item to your various COGS and expense accounts. Additionally, they allow you to approve invoices that you want to be paid.
Remember, a POS system and financial software will help you manage your financials more efficiently. With the right tools, you can easily track financial data, generate accurate financial reports and monitor restaurant performance. You should also keep detailed financial records of all your restaurant bank accounts, including your business checking, savings and credit card accounts. Sync your restaurant accounting software with apps that organize sales, employees, and back of house with less manual data entry. Now make sure to reconcile all bank accounts, merchant clearing accounts, credit cards, loans, lines of credit, and payroll liabilities every single month.
Ensure that you keep all receipts and invoices organized and record your transactions accurately. For this step, it can be helpful to hire a bookkeeper to do this for you so you can focus on other parts of your business. Just like keeping track of orders, oven temperatures, and the right amount of salt, you have several things to track when doing accounting for your restaurant. Offering to smaller restaurants that feel they can still work on the day-to-day tasks of the restaurant as well as do their own bookkeeping. We reconcile your books at the month-end close out your books as well as provide monthly reports.
Step 3: Simplify your payroll processing
Restaurants should be looking at sales vs. cost of goods sold ratios as well as labor ratios. Another ratio many restaurants should consider is the prime cost, which aims to keep the cost of food + beverage + labor at roughly 60% to 65% of your total sales. A restaurant profit and loss statement, also called a P&L, is a financial document detailing the total revenue and expenses over a predetermined period of time. P&Ls provide an overview of your restaurant’s revenue, costs, and expenses. You can choose between cash basis accounting and accrual accounting depending on your profit amounts. You’ll also need to keep constant track of inventory, food and pour costs, prepaid accounts, short pays and vendor credits, and tips.
- Choose an accounting software to streamline your data entry tasks, create customized invoices, track your revenue, create regular profit and loss statements, and review your cash flow.
- Plan to analyze your financial data weekly and for each period, and work with your accountant (if you have one) to set financial goals and develop strategies to achieve them.
- Remember, servicing your commercial ovens and refrigerators will probably cost more than what you pay for your Frigidaire at home.
- Paying your restaurant staff, including front-of-office staff and kitchen crew, is part of your labor costs.
- Most restaurants accept credit cards and settle the batch on a daily basis.
Accounting leads to better financial management, deeper insights into your business’s financial status, better tracking of cash flows, and a more robust system of tracking inventory. You’ll also learn to take control of your prime costs and adjust menu pricing based on demands and inventory costs. Prime costs are items such as food and beverage costs, salaries, payroll taxes, and benefits. It also shows how well the business is being managed on a daily basis. If a restaurant is run well, prime costs should stay around 60% to 65% of sales. Bank reconciliation is essential to ensure your bookkeeping records match your bank accounts, payroll liabilities, lines of credit, loans, and credit cards.
Accounting Software for Restaurants Free Download
It offers a comprehensive platform to meet the needs of restaurants of all sizes, as well as owners ranging from beginners to experienced bookkeepers. 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. The restaurant chart of accounts documents all financial transactions in your restaurant, including revenue, assets, and liabilities. Doing restaurant accounting can be as rewarding as creating your favorite recipes when you do it the right way.
It’s best for restaurant owners who are looking for budget-friendly software. The software helps balance your books so you can spend time doing other things for your restaurant. The next step up is the Growing plan for $34 per month, which includes unlimited bank transaction reconciliations, invoices, bills, and receipts.
Plan to analyze your financial data weekly and for each period, and work with your accountant (if you have one) to set financial goals and develop strategies to achieve them. Next, set up a chart of accounts, which is a system that organizes your restaurant’s accounts into categories, such as assets, liabilities, income, and expenses. The cash accounting method is a simpler way to do accounting for your restaurant. With this method, you record income when you receive it and expenses when you pay them.
Any account that gets a statement with a beginning and ending balance can be reconciled. Account reconciliation ensures that you are looking at accurate financial reports. As a business owner, you are at major risk by doing your own payroll. If you incorrectly file your payroll taxes or file them late, the penalties and interest you will be assessed can be quite large. A few notable restaurant accounts payable services that are worth mentioning are XtraChef by Toast, MarginEdge, and PlateIQ.
Take photos and upload receipts right from the store and respond to clients and vendors directly through the app, anywhere you go. A good restaurant POS system will generate detailed daily sales, inventory, and staffing reports. All this data can be used to identify areas of the business that need improvement. Get your restaurant’s finances in order with our tips for effective bookkeeping.
Menu item profitability
It can be used for different types of small businesses and isn’t specific to restaurants, so you may need to take your time setting up the software and creating restaurant-specific processes. We chose Xero as our restaurant software with the best features because of the sheer number of useful tools. The program’s features are easy to use, including integration with payroll services, a mobile app, and real-time reporting.
- Easily run reports to see trends—like weekly and monthly pay differences, or payroll costs by kitchen, front of the house, and management—so you can make any necessary adjustments quickly.
- You and your accountant can use your P&L to review the total revenue and expenses of your business over a period of time.
- While daunting, learning what you need to know about restaurant accounting is not insurmountable.
- Reconciling your accounts is the only way to know that you have recorded all of your financial transactions.
- We help restaurant know their numbers and properly manage cash flow.
Bookkeeping is about keeping a track of all the transactions of a business through journals and ledgers. 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. 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. Founded in 2014 as an automated system for invoice processing and accounts payable, Plate IQ is for both beginner and advanced bookkeepers and accountants, as well as small and large establishments.
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. You can break these categories into subcategories to provide a more digestible breakdown of your financial transactions, such as food and beverage, marketing, and labor costs. A chart of accounts makes it easier to locate specific accounts to identify trends, generate accurate financial statements, and make improvements. Restaurant accounting uses data to assess your restaurant’s financial situation and make business decisions. An accountant will create financial statements, build financial reports, and oversee the bookkeeper’s work.
Bookkeeping also allows you to monitor your progress over time and spot any potential problems early on. Monitor key financial metrics such as profits, expenses and cash flow to gain insights into your restaurant’s financial health. It’s important to have an overarching financial plan before you get started with restaurant bookkeeping. A financial plan will help you stay organized and track your financial progress and metrics. At the end of the day, accounting is all about getting the information you need to make smart decisions. That means seeing a comprehensive picture of your entire restaurant, presented the way you want.
How much does an accountant cost FAQ
Many restaurant owners who have a non-commerce educational background often put them in turmoil whether they require a bookkeeper or an accountant. The main objective of this article is to offer an insight regarding the difference between restaurant accountants and restaurant bookkeepers. Danielle Bauter is a writer for the Accounting division of Fit Small Business. She has owned Check Yourself, a bookkeeping and payroll service that specializes in small business, for over twenty years. She holds a Bachelor’s degree from UCLA and has served on the Board of the National Association of Women Business Owners. She also regularly writes about travel, food, and books for various lifestyle publications.
Restaurant Accounting’s bookkeepers will work with you to find the financial delivery date that works for your needs. However, not all founders and CEOs are trained finance professionals – software and financial packets are only half the story. Restaurant Accounting’s accounting team knows how to explain what financial statements mean and how important metrics impact a restaurant’s strategy. You can rest assured that we will work closely with you to create actionable business plans and accurate financial reporting. We offer our toolkit of financial intelligence that will be your greatest asset for business growth. While there are many great restaurant POS systems on the market we like Toast the best.
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. Payroll is responsible for calculating and distributing employees’ paychecks.