When thinking of running a restaurant successfully, you need more than just love and passion for food. Bookkeeping and accounting are two vital functions you need to deploy to keep track of your restaurant’s financial performance and health.
Now that restaurant accounting is unique due to the language of hospitality finance, utilizing an effective accounting system becomes crucial. Moreover, implementing a streamlined process for bookkeeping for a restaurant is vital because of slim profit margins.
For efficient bookkeeping and accounting, you need to understand the principles of the food and beverage industry.
This article will discuss the intricacies of restaurant bookkeeping and accounting, how to set up your books, vital financial statements, and much more.
What is Bookkeeping for a Restaurant?
Restaurant bookkeeping is all about organizing financial records so the owner can better understand the restaurant’s financial performance at a given time.
It involves recording, tracking, and monitoring the financial transactions in a restaurant daily and adjusting the budget to align it with the restaurant’s actual income and expenses.
Financial transactions in a restaurant can range from inventory costs, equipment, and utilities to the menu prices of food and beverages.
What Does a Restaurant Bookkeeper Do?
To help the owner run the business successfully, bookkeeping for a restaurant should involve planning a business strategy and having a budget. Besides this, the following are critical responsibilities of restaurant bookkeepers:
- Keeping track of where the money is coming from and where it’s being spent.
- Keeping track of how much money is being spent.
- Keeping track of how much revenue is coming in.
- Calculating how much revenue a restaurant needs to generate a profit.
- Overseeing payroll and vendor invoices
- Reconciling accounts
- Maintaining records for tax obligations and filing those taxes.
- Preparing financial statements
Restaurant accountants stay on top of inventory, costs, and revenue to ensure businesses generate enough profits. By fulfilling these responsibilities, bookkeepers offer valuable advice on how restaurants can reduce food and overhead costs to make the most out of their profit margin.
How to Set up the Books for Restaurant Accounting?
You can seek the professional guidance of an accounting outsourcing service provider to set up the books for restaurant accounting. Following these three steps can help you set up your accounting books:
Step 1: Utilize accounting software
Restaurant accounting software is explicitly designed to help restaurant owners handle bookkeeping and accounting processes more efficiently.
Such software streamlines your data entry, tracks revenue, expenses, and cash flow, and generates customized invoices and financial statements. Using accounting software will automate and organize common bookkeeping practices for your restaurant.
When searching for the right restaurant accounting software, ensure it’s an easy-to-use, flexible, scalable, and cost-effective system. In addition, see to it the software seamlessly integrates with your restaurant’s point of sale system.
Step 2: Determine the chart of accounts
The chart of accounts helps categorize income and expenses and includes revenue, expenses, assets, liabilities, and owner’s equity. You can further break this chart of accounts into subcategories tailored to your business.
It will allow you to monitor and compare each category to industry averages. Moreover, you can get a quick snapshot of where your money is coming from and going.
Step 3: Choose a point-of-sale system
A point-of-sale system (POS) is a computerized system that records orders and processes payment transactions. Such systems can be ideally used to manage cash, process receipts, run sales reports, and track inventory, labor costs, and payment methods.
When choosing a point-of-sale system, ensure it’s easy to use and integrate with your existing accounting software. Installing a POS system specifically designed for restaurants can be a game-changing move as it provides you access to vital data in real time.
What are the Vital Financial Statements for Restaurant Bookkeeping?
Including the following listed financial statements in your restaurant bookkeeping process can help you track your business’s financial performance and health:
Profit and loss statement
The Profit and loss or income statement will reflect your restaurant’s expenses, costs, and sales during a specific period.
Including this statement in the process of bookkeeping for a restaurant will enable you to analyze your business’ financial progress. Moreover, analyzing this statement will help determine where you are making or losing money.
Daily sales report
A daily sales report helps record sales (revenue) for the day. Using this report, you can break down the revenue into different categories to better know what is selling.
In addition, you can learn what payment methods were used, which comes in handy when reconciling accounts.
Cash flow statement
A cash flow statement records all the incoming and outgoing cash during a given period. Analyzing this report helps you know where money is going and from where it’s coming.
Moreover, a cash flow statement will help ensure your restaurant has enough amount flowing each way.
Balance sheet
A balance sheet records your restaurant’s equity, assets, and liabilities during a specific period. You can use this report to assess your restaurant’s financial position and to forecast short-term and long-term cash flow.
What Things Should a Restaurant Bookkeeper Monitor and Track?
To stay within the budget, meet the desired goals, and fulfill necessary obligations, your restaurant should monitor and keep track of the following things:
- Payroll
- Inventory
- Accounts receivable
- Accounts payable
- Cash flow
- Food and beverage sales
- Account reconciliation
- Tax obligations and filing, etc.
To wrap up it all!
While bookkeeping and accounting for restaurants can be mind-boggling, they don’t have to be a daily struggle if you implement the suitable approaches.
Collaborating with the right accounting outsourcing service provider who is up-to-date with the bookkeeping and accounting knowledge and practices in the hospitality industry can be a game changer.
Such professionals can manage your restaurant’s books of accounts in a streamlined way, making bookkeeping and accounting hassle-free.
They will regularly monitor and record crucial things, from inventory cost and sales data to operating expenses, cash flow, and payroll, to keep you updated about your restaurant’s financial performance.
Remember that staying on top of daily bookkeeping and your financial records is your ultimate solution to grow and scale your business.