Bookkeeping for a Restaurant: The Total Guide Shoeboxed

Keeping track of profit and loss can let you adjust spending when necessary. These statements help you to gain insight into how your restaurant is performing. You need accurate accounting practices to stay in line with the IRS. You also need to follow business guidelines when talking about restaurant accounting. 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.

  • Use the accounting records on hand to show how much you earn from food sales, merchandise sales, or catering jobs.
  • Keeping on top of your bookkeeping is worth far more than avoiding tax season headaches.
  • Restaurants should be looking at sales vs. cost of goods sold ratios as well as labor ratios.
  • With the ability to slice, dice, and drill into that historical data, you can identify underlying trends in different datasets.
  • Point of sale (POS) systems are computer systems used to record orders and complete payment transactions.
  • A point-of-sale (POS) is an essential piece of equipment for many businesses, but selecting the right POS system can feel overwhelming with so many options.

Most restaurants would have an inventory turnover of times for food and times for beverages,” he said. Food cost is the ratio of a restaurant’s cost of ingredients (food inventory) and the revenue those ingredients create when you sell menu items. The key to quickly calculating your prime cost in QuickBooks is having your chart of accounts set up properly. You need a parent account for both Costs of Goods sold as well as Payroll costs. Then you want subaccounts under each of those with the level of detail you desire. It should also smoothly integrate with your payroll and inventory management system.

Best for Paying Sales Tax

Download this free balance sheet template to track your restaurant’s assets, liabilities, and equity. A restaurant balance sheet lists your assets, liabilities, Small Business Bookkeeping Services and equity. Assets are things you own, like equipment, inventory, and straight cash. Liabilities are things like vendor bills and restaurant equipment loans.

If you are already using Toast for your POS system it makes sense to consider their payroll service since your payroll data can easily be pulled from Toast. Obviously, you run into a lot fewer issues when two sister systems integrate together. If you are looking for a cloud-based accounts payable system we would highly recommend

P&L or Cash Flow Statements

There are a lot of unique one-time expenses that bars and restaurants incur that may benefit from a prepaid expense account. A prepaid expense is a type of account that shows up on a balance sheet because a business made advance payments for services or goods rendered or received in the future. They’re initially recorded as current assets and their value is expensed over time. Food cost accounting is more complicated than your average restaurant profit margin calculations. Because of the numerous ingredients and labor involved in making the sellable item.

  • As “chief cook and bottle-washer,” you’ll keep the books yourself because there’s no one else to do it.
  • Cash flow is the amount of money coming in and the amount of money going out of your restaurant on a daily, weekly, and monthly basis.
  • If you hear someone talk about restaurant bookkeeping, that may only refer to recording transactions in the general ledger.
  • It’s essential to find a bookkeeper who understands the nuances of the food and beverage industry, including both front-of-house operations and back-of-house management.
  • This includes making sure there is always an emergency fund set aside for unexpected expenses like equipment breaking and needing to be replaced.

One thing you don’t want to do is to run out of ingredients for an item that is listed on your menu. So, it’s extremely important that you keep track of your inventory at all times and to place the order in a timely manner so that you don’t run out while waiting to receive the restocking order. How you set up your books for a restaurant lays the foundation for how smoothly the rest of the bookkeeping process will go. Payroll in the restaurant industry can be challenging as tracking employee hours is complex.

Bookkeeping for Restaurants: Important Reports

Some POS accepts credit and debit payments and does a lot of the bookkeeping and accounting tasks, from tracking inventory to analyzing sales data. This period of time covers your financial statements and allows you to compare performance over time. Most businesses set up monthly accounting periods, but many restaurants prefer to set up weekly periods to account for the uneven number of weekend days each month. Caryl Ramsey has years of experience assisting in different aspects of bookkeeping, taxes, and customer service. She uses a variety of accounting software for setting up client information, reconciling accounts, coding expenses, running financial reports, and preparing tax returns.

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