Amidst the hustle of creating delectable menus, dealing with suppliers, managing staff, and providing top-notch customer service, your restaurant’s bookkeeping can easily slip through the cracks.
But just like health and safety codes, bookkeeping cannot be ignored! It’s crucial for accurate financial management, making informed business decisions, and preventing financial chaos.
Don’t let your restaurant dream turn into a nightmare!
We’re here to offer practical advice on mastering the art of bookkeeping for a restaurant, including effective ways to streamline your bookkeeping processes, the best software options, common pitfalls to avoid, and the benefits of getting professional help.
Bookkeeping for a Restaurant in Layman’s Terms
Bookkeeping for a restaurant involves tracking all financial transactions, including sales, expenses, payroll, and inventory.
It’s about recording every cent that comes in and goes out to keep your business’ financial health in check.
Many restaurant owners believe they can handle their bookkeeping rather than outsourcing it.
After all, every dollar counts and cutting costs seems like a smart move. But is it really?
Do Restaurants Need a Bookkeeper?
Without professional bookkeeping, it’s easy to miss details, mismanage funds, and end up with incorrect financial records.
These mistakes can cost more than hiring a professional bookkeeper in the long run and cause unnecessary stress.
Other benefits of having a bookkeeper include
- Better financial planning
- Clear insights into profitability and cost control
- Improved cash flow management
- Higher chance of securing loans and attracting investors
- Timely and accurate tax filings
- Reduced risk of financial fraud
- More time to focus on business growth
Common Financial Pain Points for Restaurants
- Cash flow management: Steady cash flow can be tricky, especially with the ups and downs of daily restaurant operations.
- Seasonal revenue fluctuations: Income can vary greatly with the seasons, making budgeting and planning a constant challenge.
- High operational costs: Staff wages, rent, utilities, and food supplies.
- Inventory management: Balancing the right amount of stock without over-ordering or running out.
- Unexpected expenses: Equipment breakdowns, supply chain issues, and staff turnover.
The Recipe for Restaurant Success: Mastering Your Books
Don’t let those pain points discourage you! You can avoid them by employing the following effective bookkeeping practices.
- Financial monitoring: Keeping a close eye on daily and weekly financial reports to manage cash flow.
- Budgeting and forecasting: Creating budgets to anticipate seasonal revenue fluctuations and planning accordingly.
- Expense tracking: Monitoring expenses to identify and control high operational costs.
- Inventory tracking: Using software to manage inventory levels, reducing waste and ensuring efficient stock management.
- Emergency fund allocation: Regularly setting aside a portion of profits to cover unexpected expenses.
Hacks for Setting Up Bookkeeping for a Restaurant
Automating Repetitive Tasks
Automating bookkeeping tasks, such as invoice generation, expense tracking, and inventory management, saves time, reduces human error, and provides real-time financial insights.
In contrast, manual bookkeeping is time-consuming, prone to mistakes, and often leads to outdated financial information.
Popular software like MYOB, Xero, and Zoho Books are ideal for hospitality bookkeeping and accounting for restaurants because they offer features tailored to the industry.
- MYOB is known for its payroll management, customisable reports, and excellent customer support.
- Xero provides seamless integration with point-of-sale systems, easy expense tracking, and robust reporting tools.
- Zoho Books offers comprehensive inventory management, automated invoice creation, and effortless collaboration with your accountant.
Creating a Chart of Accounts
A chart of accounts is an extensive list of all the financial accounts in your restaurant’s bookkeeping system.
It provides a structured framework for organising all your financial transactions, making tracking income, expenses, and profitability easier.
Your chart of accounts should include these key categories:
- Revenue accounts: Income generated from sales, including food, beverages, and other services.
- Expense accounts: Costs incurred in running the restaurant, such as food supplies, wages, utilities, rent, and marketing.
- Asset accounts: Resources owned by the restaurant, such as cash, inventory, equipment, and property.
- Liability accounts: What the restaurant owes, including loans, accounts payable, and other debts.
- Equity accounts: Representing your interest in the business, including retained earnings and owner’s equity.
Be sure to regularly review and update this chart of accounts as your business grows and evolves to accommodate better financial decision-making and resource management.
Benefitting from a Point-of-Sale (POS) System
A Point-of-sale (POS) system manages sales transactions, tracks inventory, and generates detailed financial reports.
By integrating sales and payment processes, this essential tool reduces errors, speeds up service, and provides valuable insights into customer preferences and sales trends.
Popular POS systems:
- Square is ideal for small to medium-sized hospitality businesses. It’s known for its affordability, ease of use, and features, which include inventory management, sales reporting, and employee management.
- TouchBistro is designed specifically for the food service industry. It offers tableside ordering, menu management, and real-time reporting to improve efficiency and customer service.
- Lightspeed is ideal for larger or multi-location restaurants. It has advanced features like detailed sales analytics, inventory tracking, and seamless integration with other software.
Important Reports for Restaurant Bookkeeping
Cash Flow Statement
A cash flow statement is a financial report showing your business’ cash inflow and outflow.
It helps you understand how well your restaurant generates cash to cover its debts, operating expenses, and investments.
The components of a cash flow statement include
- Cash generated from daily business operations.
- Cash spent on or received from investments: equipment, property, or other long-term assets.
- Cash received from or paid to lenders and investors: loans, repayments, and equity financing.
Balance Sheet
A balance sheet gives a snapshot of your restaurant’s financial health at a specific point in time.
It shows what your restaurant owns and owes, helping you maintain a strong financial position and efficiently manage your resources.
A balance sheet should include
- Assets owned by the restaurant: cash, inventory, equipment, and property.
- Liabilities the restaurant owes: loans and accounts payable.
- Equities (your interest in the business): retained earnings and owner’s equity.
Sales Report
A sales report summarises your restaurant’s revenue, helping you track performance, identify trends, and make informed decisions about menu items, pricing, and promotions to maximise revenue.
A sales report includes
- Total sales from a specific period.
- Sales by category: food, beverages, and other items.
- Sales by period: daily, weekly, or monthly.
Payroll Report
A payroll report details employee compensation.
This information assists with managing labour costs and complying with tax regulations and labour laws.
A payroll report must include
- Total wages paid to employees.
- Taxes withheld from wages.
- Employee benefits: health insurance and superannuation contributions.
- Additional deductions: garnishments and union dues.
Profit and Loss Statement
A profit and loss statement, also known as an income statement, summarises your business’ revenues and expenses over a specific period.
You’ll then be better equipped to track financial performance and identify areas for improvement.
A profit and loss statement includes
- Revenue generated from sales.
- Cost of goods sold (COGS).
- Gross profit (revenue minus COGS equals profit before operating expenses).
- Operating expenses: wages, rent, and utilities.
- Net profit (revenue minus expenses).
Avoid These Common Hospitality Bookkeeping Pitfalls
1. Failing To Keep Detailed Records
Result: Financial inaccuracies and discrepancies.
Solution: Maintain comprehensive and organised records of all transactions for accurate bookkeeping and easier audits, documenting each transaction with details such as date, amount, purpose, and related documentation.
2. Ignoring Tax Obligations
Result: Potential penalties, fines, and a damaged business reputation.
Solution: Stay informed about tax deadlines and regulations, and consider hiring a tax professional to ensure compliance and maximise your deductions.
3. Not Reconciling Bank Statements
Result: Errors in financial reporting and mismatched accounts.
Solution: Regularly reconcile your bank statements with your bookkeeping records, preferably monthly, to catch discrepancies early, detect fraud, and maintain financial accountability.
Do It Yourself vs. Using a Professional Bookkeeping Service
DIY
Pros:
- Save money on hiring a professional.
- Direct control over your financial records.
Cons:
- Takes significant time away from running your restaurant.
- Higher chance of mistakes and missed details.
Professional Bookkeeping
Pros:
- Access to experienced professionals with expertise in business finances.
- Saves time, allowing you to focus on other aspects of your business.
- Reduces errors and ensures compliance with financial regulations.
Cons:
- Additional expense. However, you can save money in the long run by avoiding costly bookkeeping mistakes.
How To Choose the Right Hospitality Bookkeeper
When choosing a bookkeeper, consider their experience with bookkeeping for the hospitality industry and their reputation by checking reviews and asking for references from other restaurant owners.
Check that they offer all the services you need, like payroll management, tax and BAS preparation, and financial reporting.
Verifying that they use the latest, most reliable accounting software is also a good idea.
Last but certainly not least, compare their pricing with other providers to get the best fit for your budget.
Get Your Restaurant’s Bookkeeping on the Front Burner with GeekBooks
Getting bookkeeping for a restaurant right goes hand in hand with serving delicious food.
If your finances falter, how will you keep serving such food for customers to enjoy?
At GeekBooks, we’re your sous chef, with the right ingredients and expertise to keep your finances in order so your business not only survives but thrives.
Don’t put your bookkeeping on the back burner! our experience with accounting for restaurants and hospitality bookkeeping.