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Do you own a restaurant? Hate restaurant bookkeeping? This article is for you.
Running a restaurant is a dream for many. Serving great food that brings smiles to customers makes the life of a restaurateur incredibly rewarding.
Unfortunately, a stellar dining experience is not the only thing that will make a restaurant a success. The ‘other stuff’ like restaurant bookkeeping and managing finances is as important; because after all, a restaurant is still a business.
As a restaurant owner, you probably already have a lot on your plate, from supervising employees, overseeing operations to inventory management and more. And the last thing you want to deal with is updating your books. However, putting bookkeeping on the backburner is not a great idea.
In fact, did you know neglecting finances is one of the top reasons why restaurants fail? Maybe you’re getting many customers and your orders for takeouts and deliveries are non-stop, so you won’t have time to update and look at your numbers. Next thing you know, your expenses are through the roof and you don’t have enough money in the bank for the next payroll — yikes!
Although staying on top of your cash flow doesn’t sound appealing, it’s your duty as a business owner to get a good grasp of your financial health. One way to do this is through efficient bookkeeping. To help, we created a simple guide on restaurant bookkeeping.
Steps to Handle Your Restaurant Bookkeeping Like the Pros
1. Keep a record of your sales daily
The first step to proper bookkeeping is to track your sales daily. Not only will this make your accounting process a breeze, but this is also beneficial for long-term financial analysis.
If you haven’t yet, consider investing in a Point of Sales system (POS) so you can easily track your daily sales, where you can also generate daily sales reports. Most modern POS systems have automation features so you can constantly track your sales summary daily.
Your POS should then be integrated with an accounting or bookkeeping software that will automatically collect data and organize your financial transactions. Having your systems fully integrated reduces the time you spend on manual data entry, as well as prevents human errors, which are both pain points in bookkeeping.
There are various software solutions that you can choose from, like Restaurant365, Quickbooks, and Xero.
2. Adapt accounts payable tool
If you’re in business, you definitely know that your relationship with your vendors is as important as your relationship with your customers. Paying your suppliers on time is one way to build a good and long-standing relationship with them. However, the process of paying your vendors isn’t actually straightforward. You have to keep track of invoices, monitor deliveries, record, and approve, which is time-consuming.
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An effective way to streamline this process is to use an accounts payable (AP) automation tool. There are many benefits of using AP automation software for accounting and restaurant bookkeeping.
This tool conveniently captures both paper and electronic invoices so you can submit and approve purchase orders and invoices digitally all on the same platform. More importantly, AP automation tools allow you to securely send payments to your vendors so you’ll never miss settling your bills anymore.
3. Simplify payroll process
The key objective in bookkeeping is to maintain an accurate and complete record of all the financial transactions of the business, including payroll. By maintaining correct payroll data in your books, you can monitor and understand your labor costs.
It may seem that payroll is a simple task, but it’s a different story in the restaurant business because you also deal with regulations on tips and tax laws. Payroll could be manageable if you make yourself familiar with all the laws.
4. Make account reconciliation a habit
Another important task in bookkeeping is making sure that your recorded financial transactions in your accounting books match the records in your bank accounts.
Performing this activity at least once a month is a great practice. This task is essential in a restaurant business because it will help you identify any discrepancies in your books that can greatly affect the financial health of your company.
5. Keep a close eye on your numbers
The key to a successful restaurant business, or any enterprise for that matter, is monitoring your financial data and operational reports. It is key to making sure that your food business remains profitable and remains in the black.
One report that you should keep a close eye on is your profit and loss statement (P&L). The P&L, also known as an income statement, lists the company’s sales, costs (food cost, labor cost, etc.), and expenses at a certain period. It allows you to break down the performance on sales and profit and also pinpoint issues, as well as identify trends.
It is recommended to review your P&L once a week, monthly, or the least at least once every quarter. For a busy restaurant owner, it could be a tedious task to run keep track of your income statement on a regular basis, but this is made easier if you have a restaurant bookkeeping or accounting system in place.
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6. Stay updated on changes
Having all your profits and expenses recorded and updated in your books is vital in paying the correct taxes on time. Up-to-date records will make it easier for you to determine how much taxes you’ll need to pay the IRS.
Besides this, you also have to be aware of any tax rules that may have changed over the current financial year. Make sure to check any tax relief related to the pandemic and other updates for you to use them to your advantage.
Be sure to also look out for funding that is made available to businesses directly affected by the pandemic, such as restaurants.
Restaurant bookkeeping could be a tall task for owners who already are wearing so many hats. But by following these simple steps above can give you a better understanding of your business’s financial standing.
If it all seems still too overwhelming, you have the option of outsourcing a professional bookkeeper. She/he can suggest the best restaurant bookkeeping system or process for your business and also help you integrate tools to make monitoring your numbers easier. A bookkeeper can also take care of processing your payroll so your employees are paid quickly and accurately.
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5 Accounting and Bookeeping Strategies for Business Owners to Help Keep the IRS of your Back and Grow your Business
If you are falling behind your books, they can definitely help you catch up so your records are updated in no time.
Our team of bookkeepers in Akuracy have experience working with various companies, including those from the restaurant industry. Reach out to us if you want to know how we can help you with your bookkeeping.