Restaurant accounting and bookkeeping basics for new restaurant owners NEXT


bookkeeping restaurant

Also, you may have some employees who get paid an hourly wage while others get a salary. Employee payroll is subject to regulations on tip reporting, state unemployment, payroll taxes, social security, and medicare taxes. Outsourcing the payroll is a surprisingly low-cost way to assure consistency and dependability in bookkeeping.

  • It breaks the revenue down into different categories so you can see what is selling.
  • These fixed costs typically make up the minority of your restaurant expenses.
  • Restaurant bookkeeping plays a crucial role in effectively managing your restaurant’s finances.
  • Your POS can give you deep insights on best and worst sellers, menu sales trends over time, and your inventory status.
  • Reconciling accounts keeps you aware of lost checks, incorrect deposits, or cash variances.
  • Every employee will have different pay and hours of work, depending on their experience and role — whether they are at front of the house, back of the house, or managing operations.

Employees still need to report cash tips—and both the restaurant and employee must still pay taxes on them. A profit and loss (P&L) statement is a summary of the costs, revenues, and expenses over a specific period. A cash flow statement is a summary of the cash and cash equivalents entering and leaving a company’s coffers.

Restaurant Accounting: Two Restaurant Bookkeeping Methods

She is also experienced in setting up corporations with the State Corporation Commission and the IRS. Keeping track of your revenue is important Accounting for Startups: The Ultimate Guide to restaurant bookkeeping. Use the accounting records on hand to show how much you earn from food sales, merchandise sales, or catering jobs.

Some retail companies can take physical inventory monthly, quarterly, or even annually. We’re going to take a look at some restaurant accounting basics as well as some factors that are specific to restaurant accounting. Having knowledge about restaurant accounting is important if you are involved in any of the behind-the-scenes activities at a restaurant.

Dealing with Prepaid Accounts

To calculate overhead rates, the total fixed costs are divided by total operating hours. Calculating food costs will indicate whether you are making a profit from each item on the menu. To calculate food costs, the preparation cost of each item is divided by the revenue from each item.

As you look at all the facets of restaurant accounting, it’s important to know about two different accounting methods. Some restaurants set up weekly accounting periods while others do it monthly. Once you know when your accounting periods will be, it can make it easier to compare different aspects of your business. If you hear someone talk about restaurant bookkeeping, that may only refer to recording transactions in the general ledger. An accountant’s duties are more far-reaching and look at more of the broader financial picture of a restaurant.