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Use this step-by-step guide to restaurant accounting to make your bookkeeping tasks simple and accurate. There are many benefits to keeping accurate records for your restaurant. If you don’t keep track of your income and expenses, you could end up owing a lot of money come tax time.

Hire an accountant

restaurant bookkeeping can quickly become too complex for restaurant owners to handle. If you are not confident in your ability or lack the time that’s needed for accurate and thorough bookkeeping, consider hiring an accountant. As with any business decision, weighing up the pros and cons is crucial, as outsourcing can be costly. A cash flow statement tracks all the money that comes in and out of your restaurant during a specific period.

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. Regularly analyzing your restaurant’s financial and operational data is crucial for restaurant bookkeepers to help the business maintain a healthy bottom line. Key reports such as profit and loss (P&L) statements and prime cost (food and labor costs) provide valuable insights into your restaurant’s performance.

Menu item profitability

It goes well beyond getting the books right – our integrated tax preparation team, FP&A team, and CFOs can help your company be ready for the strategic situations that make running a startup special. ZipBooks offers a tiered pricing system; the first tier is Starter and is free, while the next tiers are $15 per month, $35 per month, and custom-priced (for the top-tier offering). To create a P&L for your restaurant, you subtract the total cost of goods sold from your Master Total for the week to calculate gross profit.

The next restaurant accounting area you’ll need to pay attention to is the expenses. Tracking expenses monthly and even weekly helps you understand how you can improve and cut down spending. Since your POS logs revenue coming in and much of the money going out of your restaurant (credit card refund, food cost, labor), you can use it to analyze sales and costs. Restaurants have KPIs, reports, and business and tax structures that are unique to the restaurant industry.

Accounting Firms

While accounting for restaurants can be arduous, it doesn’t have to be a daily struggle if you choose the right approaches. It’s recommended that restaurants use accrual accounting since it provides a more accurate view of your financial situation and tracks accounts payable and accounts receivable. However, the cash accounting method can still be a good option for smaller restaurants since it’s the easiest. 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.

If you were to use a calendar year accounting period, for example, you’d have to compare longer months with shorter months, and sometimes one day can make a big difference. Restaurant owners typically don’t have access to a traditional employer-paid 401(k) plan, but there are other retirement plans designed with small business owners in mind. Some options to consider include the Simplified Employee Pension (SEP) IRA or Roth IRA. A financial planner can help you choose a plan to help you meet your retirement goals. Though paying employees may seem like a straightforward task, it’s more complex than you might think.

Best Accounting Software for Restaurants of 2023

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. Plate IQ is used by multiple industries, including restaurants, restaurant accounting firms, groceries, and hotels. It takes data from your POS and can automate your sales tax in as little as five minutes.