Restaurant Bookkeeping: Best Practices for Busy Owners

Track COGS by category to understand which types of items drive your costs. Separate food COGS from beverage COGS because they typically have different profit margins and management requirements. Compare your food costs to industry benchmarks and local competitors. If your costs are significantly higher, investigate your sourcing, portion sizes, and waste management practices. Analyze sales volume alongside profit margins to identify your most profitable items overall.

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Versha is dedicated to delivering exceptional client experiences by integrating smart financial solutions, streamlining operations, and fostering meaningful collaborations that drive sustainable growth. Her ability to communicate effectively across all levels ensures seamless financial management and strategic decision-making. Restaurant accounting software is specifically designed to help restaurants manage their financial transactions. Apps typically include features such as sales tracking, expense tracking, and financial reporting, making it easy for restaurants to stay on top of their accounting. This method is commonly used by small businesses, including restaurants, as it is relatively simple and easy to implement.

Perishable inventory

These financial transactions range from inventory costs, equipment, and utilities to menu prices. While accounting for restaurants can be arduous, it doesn’t have to be a daily struggle if you choose the right approaches. Proper bookkeeping involves tracking the cost of inventory, including food and beverages, and regularly updating inventory records.

What is a P&L statement for a restaurant?

• That means a statement every four weeks instead of every month, since months have a varying number of days.
• Review your financial performance regularly, adjust your processes as needed, and stay current with industry best practices.
• Overhead rates show how efficiently you’re managing your fixed and semi-variable expenses.
• Shaunak is an experienced and innovative entrepreneur who has helped launch and scale businesses in different industries.
• A bookkeeper for a restaurant ensures accurate financial records while helping owners save time.

Once you’ve posted all transactions to their respective accounts, you need to calculate each account’s final balance. Typically, you make this calculation at the end of the accounting period. As a general rule, your cost of goods sold should make up about one-third of your restaurant’s total expenses.

You need to understand what’s selling, when it’s selling, and at what profit margins. This sales data restaurant bookkeeping drives menu decisions, staffing plans, and pricing strategies. It captures sales data, processes payments, and feeds information into your accounting software. Don’t just rely on your POS systems to collect restaurant sales data. With this check and balance strategy, you further ensure the accuracy of your financial data for accounting purposes.

Outside of hiring someone else to crunch the numbers, using a software program is your best bet for effective restaurant accounting. The key here is to be organized and simple with a system that makes sense for your restaurant. https://jkgreen.in/bookkeeping/year-end-bookkeeping-servicestax-prep-bookkeeping/ Whether you use pen and paper, a spreadsheet, or a mobile application doesn’t matter as long as you’re able to accurately track your restaurant’s transactions and performance. That said, bookkeeping software can be especially helpful to get this system set up as it can streamline the process and minimize errors when doing the actual recording.

Enter sales and expenses every day, reconcile accounts weekly or monthly, and keep inventory aligned with bookkeeping records so food costs reflect reality. Pay close attention to prime costs (food and labor combined), since they account for the bulk of expenses and can quickly dictate profitability. For many restaurant owners, bookkeeping may feel like an overwhelming task, especially if you’re new to the industry or don’t have an bookkeeping accounting background. However, with the right processes and tools in place, bookkeeping can be manageable and even empowering. It provides valuable insights into your business’s performance and helps you stay on top of your cash flow, tax obligations, and financial goals.

Best Practices for Restaurant Bookkeeping

• Calculating critical metrics is a cornerstone of effective restaurant bookkeeping, providing insights into operational efficiency and profitability.
• It records income as it enters your bank account and records expenses when they’re paid.
• It’s critical to track payroll so you can meet important reporting deadlines and payroll tax obligations.
• As you gain some experience with restaurant accounting, you may discover that while sales need to be recorded every day, expenses may only need to be recorded every two weeks.
• To help you prepare for the complexities of restaurant bookkeeping, we’ll explore the key factors that make it unique and share helpful insights along the way.
• Outsourcing payroll services or automating the process with an integrated restaurant management platform ensures accuracy and compliance, saving time and reducing the risk of penalties.

That means that you will owe $5000 in sales tax for the month of May. A mere $5000 can mean the difference between just breaking even and actually making a profit. You can also use the food sales worksheet you created above to record beverage sales. Be sure to categorize your number by drink type including beer, soft drinks, wine, and cocktails.