7 Restaurant Bookkeeping Tips and Best Practices

Revenue (sales, tax, tips, and credit card fees) are reconciled against settlement (accounts receivable, cash and credit card deposits, discounts and coupons, gift certificates redeemed). The result is either cash over or short – but in an ideal world, you’re at zero. Accounting software can seamlessly aggregate your chart of accounts for you and populate key financial reports with accurate information. It can show you an overview of your key financial reports, such as your balance sheet, cash flow report, and profit and loss statement. It’s a high-level point of reference when comparing your data to industry averages and also assists in keeping track of your expenses.

We chose DAVO as our best accounting software for paying sales tax for restaurants. It’s a niche product designed to seamlessly calculate and pay your sales tax on time and in full while taking advantage of applicable discounts. If you need more accounting, bookkeeping, or management services, you may consider using DAVO in addition to other accounting software for restaurants. 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.

What is Restaurant Accounting?

Restaurateurs and investors use EBITDA when they’re looking to sell, buy, or invest in a restaurant to help guide their buying decisions. It’s a tool for a valuing a restaurant and gauges a restaurant’s earning potential. Your breakeven point represents how much revenue you need to earn to cover your expenses. Please include what you were doing when this page came up and the Cloudflare Ray ID found at the bottom of this page.

Keeping records of how much you’re spending is a necessary step in determining how much money you need to earn each week to break even or earn a profit. A bookkeeper oversees payroll and maintains records for tax obligations. A restaurant business should consider outsourcing payroll, That’s because there are liability issues and high penalty fees on the line for mistakes made in payroll. Payroll Bookkeeper360: Xero Accounting & Bookkeeping Solution is complicated and time consuming which is why hiring an expert to do payroll will handle the complicated and ever changing local, state and federal laws surrounding workforce requirements. As a business owner you won’t have time to keep up with these changes. Outsourcing your payroll is surprisingly affordable and a necessary option for bookkeeping to ensure consistent and reliable paychecks.

Step 5: Calculate your costs

Once you’re behind on your restaurant accounting, it is difficult to get caught up. Unlike many retail industries, inventory costs for restaurants can fluctuate wildly, even from week to week. Or maybe disease has affected how much cod your fish supplier has in stock. It could also just come down to the fact that you’re ordering asparagus when it’s out of season.

It’s a good idea to set up an inventory management system that reduces waste and optimizes food cost. This will also help you avoid food surpluses and shortages, https://accounting-services.net/small-business-bookkeeping-basics/ and instead strike a more accurate balance. If you have a bookkeeper and accountant, they will be able to provide you with a detailed report on each of these.

Understand and Track Your Expenses

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. While there are many great restaurant POS systems on the market we like Toast the best. Restaurant bookkeeping with Toast and QBO is by far our most preferred setup.

Using this method allows you to mimic how the cash and credit card deposits hits your bank account on a daily basis. Most restaurant POS systems accept credit cards and settle the batch per day. This will result in a credit card deposit or deposits hitting your bank account separately for each batch.