You should reconcile bank accounts, credit cards, loans, lines of credit, and payroll liabilities. 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. The next restaurant accounting area you’ll need to pay attention to is the expenses.
Identifying and reducing controllable costs in the restaurant business
Our partners cannot pay us to guarantee favorable reviews of their products or services. We believe everyone should be able to make financial decisions with confidence. The only drawback to Toast payroll is that right now they do not have a QuickBooks integration. While we have been inquiring about it for over a year they have yet to add this functionality. You can then upload your invoices to Bill.com to allow your accountant to code them properly.
Reconcile your accounts
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. Choosing accounting systems for restaurants can help you eliminate the difficulty with restaurant accounting and help you manage your food costs easily. These systems include financial software and point of sale (POS) systems to help you quickly organize inventory counts and execute transactions.
- Employee payroll is subject to regulations on tip reporting, payroll taxes, Medicare taxes, Social Security, and state unemployment.
- This includes your rent or mortgage, equipment costs, insurances, permits, and other operational expenses.
- Your current assets are those that can be easily converted to cash within 12 months.
- It offers plans for all types of operations, including sole proprietors, LLCs, partnerships, corporations, and nonprofits.
Controllable cost report
Most restaurant POS systems will have a daily sales summary built into them. If you need to customize the report to get more detailed information you will need to work through the customization with your POS system. And importantly, it provides significant ratios analysis that tells you how the company is doing. Depending on the level of detail put into creating the P&L will determine the value obtained from it. When you calculate break-even point in dollars, you’re estimating how much revenue your restaurant will need to generate to end with a $0 balance at the end of a certain period of time. If you have a bookkeeper and accountant, they will be able to provide you with a detailed report on each of these.
MarginEdge: Best for restaurant management system with accounting integrations
Payroll in the restaurant industry can be challenging as tracking employee hours is complex. Multiple wages and staff positions are the norms in the restaurant industry, and the ability to accommodate different rates is vital. Whether running a small bakery or a fine dining restaurant, you need a POS system for cash management, sending or printing receipts, inventory management, order management, and back-office reporting. It’s important to keep regular tabs on your restaurant’s P&L each month, quarter and year. This will help to highlight how your restaurant is performing and to see if any new initiatives have positively or negatively impacted your finances.
Understand and Track Your Expenses
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. It’s important to get a user-friendly system that meets your restaurant’s needs and integrates with your accounting software. A POS system helps you automate tasks such as tracking inventory, creating sales reports, processing customer orders, and employee tips. Restaurant bookkeeping focuses on managing the financial books and documenting transactions. A bookkeeper will deliver balance sheets, produce invoices, and reconcile bank accounts.
In fact, in 2023, the average restaurant profit margin fell between 3 to 5%. Your first month with DAVO is free, and then it’s $49.99 per month per location. If you live in one of the states that offer on-time sales tax discounts, DAVO will pass that on to you.
Plate IQ is used by multiple industries, including restaurants, restaurant accounting firms, groceries, and hotels. The program is constantly updated and improved and is ideal for restaurant owners with little to no accounting or bookkeeping experience who want to manage their own books. It is easy to use, integrated with your financial institution, and compatible with most major POS systems. Now make sure to reconcile all bank accounts, merchant clearing accounts, credit cards, loans, lines of credit, and payroll liabilities every single month. The chart of accounts helps organize your financial transactions in categories that will give clear insight of your restaurant’s financial health. For DIY bookkeepers, this means careful record-keeping and keeping a close eye on your tax obligations.
Fixed costs are the costs that either don’t change or you have no control over the change. This includes your rent or mortgage, equipment costs, insurances, permits, and other operational expenses. These fixed costs typically make up the minority of your restaurant expenses. The only way to know if you’re in the red or the black is to keep an accurate account of all money coming and going from your restaurant. This may sound like common sense, but many financial anxieties come from a lack of dedication to accurate bookkeeping. Forgetting to include lease payments in your book of accounts could cause your business a lot of trouble—you might not even know that you’re already bleeding money.
Whether you handle restaurant bookkeeping yourself or rely on an accountant, adopting good restaurant bookkeeping practices will give you the insights to help your restaurants thrive. Over 52% of restaurant owners reported that high operating and food costs are some of the biggest challenges they face in running restaurants. Using accounting software can help owners and managers know where their money is going and identify potential savings. The software can also keep track of inventory and profits and correctly calculate sales tax to avoid fines. Bank reconciliation is essential to ensure your bookkeeping records match your bank accounts, payroll liabilities, lines of credit, loans, and credit cards. While this task used to be time-consuming, modern restaurant accounting tools automatically match your records against your accounts, detecting any discrepancies and accounting errors quickly and accurately.
