A successful restaurant business needs up-to-date accounting records. These records can help you assess the state of your restaurant’s finances and ensure profitability for years to come. Tracking your finances can be challenging, especially if you are not diligent about keeping records. If you are a restaurant owner, here are 10 tips to be more efficient with your accounting.

 

Create an Effective Accounting Strategy

As you already know, accounting is complicated for many business owners. You have plenty of work on your plate. Adding in accounting responsibilities can be a hassle. You might want to consider hiring small business accounting services for your restaurant. However, you don’t need an accountant to implement these tips into your financial strategy.

 

10 – Make a List of Your Expenses

You will want to perform a general accounting analysis of your finances. Take an in-depth look at your business. Make sure to list all of your suppliers and any other expenses you may have for the month. You always want to examine your restaurant’s profits and losses. With those numbers, you can create an effective strategy for your accounting.

 

9 – Look at Daily Sales and Costs

Restaurants can lose money when they don’t track daily sales and expenses. You need to have control of everything that leaves and enters your business. It can be easy to skip a day and forget to enter something in the books, but that is a big mistake. You don’t want to have any big surprises at the end of the month. By working with a reliable point of sale (POS) system, you can access all of those variable and fixed expenses. Many of these systems filter the information by date, time, and items. Plus, you can often analyze that data from a mobile device or computer.

 

8 – Keep the Payroll Updated

Payroll is more than handing out checks at the end of the week. You will have to deal with all of the legal responsibilities of paying employees. Make sure to prepare your payroll before the pay period. Being organized can help prevent any issues. You want to ensure that deductions, hours, and payment dates are all correct in your system. While you could handle this task on your own, some programs will take those numbers and plug them into the right spots. With that, you can be sure that all of the information is correct for your restaurant.

 

7- Set a Schedule

It is essential to keep a schedule. You never want to wait until the end of the month to review your finances and run those reports. Every week, take some time to schedule payments, evaluate your restaurant’s performance, and review any accounting tasks. As a business owner, you always want to respect this schedule. Letting anything slip through the cracks can lead to a financial headache.

 

6 – Digitize Your Invoices

In a restaurant, you are working with fresh ingredients. Unfortunately, the costs of raw materials can change throughout the year. Keep in mind that there will constantly be fluctuating prices. Digitizing your invoices can help you track those costs, especially when you work with several suppliers. If you already have a POS, the process is as simple as taking a photo and uploading it to the system. With that, you will know whether your food costs are rising throughout the month.

 

5 – Choose the Best Accounting Program

All restaurants are not the same. For that reason, you want to choose an accounting system that works for your business. There are several accounting programs on the market. Find one that can adapt to the size and needs of your restaurant. At the minimum, choose one that can assist with invoicing and payroll. If you need help selecting the right system, reach out to your accountant for some suggestions.

 

4 – Outsource the Accounting

While accounting software and POS can help you, it might be time to outsource those responsibilities. An accounting expert will be able to analyze the restaurant’s financial health. With their assistance, payroll, taxes, and even financial management will be in the hands of a professional. When it comes time to choose someone, make sure that they have experience with businesses in your industry.

 

3 – Don’t Wait Until the Last Minute

As you already know, you need to have constant control over your restaurant’s finances. Constantly monitor your expenses and costs throughout the week. With that information, you can compare your sales against other periods in the month or year. Waiting at the last minute to analyze data can hurt your finances. You don’t want to discover a mistake that could cost hundreds of dollars to fix.

 

2 – Review Accounting on an Accrual Basis

You never want anything to get lost. For that reason, stick to accrual-based accounting. Evaluate the data when you receive or spend income. Accrual accounting gives you a more accurate picture of your actual expenses and income.

 

1 – Always Avoid Cash Accounting

While cash accounting is the simplest form of accounting, it is not an accurate method to keep track of your financial activities. Cash accounting does not cover any of those delays involving payment plans or credit accounts. With that, you never have a complete picture of your expenses and income. Cash accounting is easier to manage, but you should avoid it at all costs.

 

 

The Bottom Line

If you want to grow your restaurant, you need to create the right accounting strategy for your business. By understanding your financial picture, you can make decisions for your business. The proper accounting methods allow you to analyze your current sales trends and track all of that valuable data for your restaurant. With these tips, you can efficiently manage all aspects of your restaurant’s accounting.

 

 

Need an Accountant for My Small Business?

If you are ready to take control of your restaurant’s finances, reach out to an experienced accountant. At TMD Accounting, our team has over 40 years of experience helping small businesses in the Gloucester County area. We can assist with taxes, payroll, and other financial management matters. Schedule an appointment by calling 1-856-228-2205.

 

When it comes time to budget for your new restaurant, you need to understand those expenses. Some of the apparent expenses are labor and food costs. Plus, there are other expenses that you need to consider, such as utilities, equipment upgrades, capital improvements, and supplies. If you want to know the biggest expense for a restaurant in South Jersey, keep reading this article.

 

Several Expenses To Consider

Once you open your restaurant, there will be no shortage of expenses. The mortgage, leases, and insurance costs are often fixed. However, others can fluctuate, like utility bills, food costs, and hourly wages. Along with that, you need to think about those unanticipated expenses. A clogged pipe, food spoilage, and broken equipment will cause a well-planned budget to go off track. When it comes time to create a restaurant’s budget, consider all of those costs to avoid future financial trouble and help better manage your expenses.

 

Determine the Fixed Expenses

When you list your fixed expenses, you know they fluctuate from month to month. These expenses include loan payments, mortgages, and rent costs. Salaried labor can even fall into this category. Other fixed expenses include membership fees, license fees, and insurance premiums. In many situations, fixed expenses are only paid once per year, but you need to keep them in the budget to account for those costs.

 

Note the Fluctuating Costs

There are many fluctuating costs in the restaurant industry, including hourly wages, utilities, and food prices. With the start-up of a new restaurant, it can be challenging to predict fluctuating costs accurately. After a few weeks or months, you will be able to better budget for all of those costs, based on the sales in your restaurant.

 

The Biggest Expense for South Jersey Restaurants

For any restaurant, food and labor are the most significant expenses. You don’t want to focus on the hard number but look at the percentage. For example, you might want to keep your food costs to less than $5,000 per week. You can reframe that by focusing on the percentage. Create a goal that food supply orders shouldn’t be more than 30 percent of your weekly sales. You want to do the same for your labor costs. Make sure to keep that labor at less than 30 percent of your restaurant’s total revenue. Keep in mind that there will be some weeks when your costs and sales could dip or rise. With that, your percentage might not exactly match up with the 30 percent goal.

If your labor and food costs are more than 30 percent of your sales, it is more than likely that the restaurant will remain profitable. It can take a few weeks or months for those new restaurants to see a trend develop for their weekly sales. New restaurant owners need to track their spending during those first few months after opening. When you need a bit of assistance, small business accounting services can help you track all of those expenses.

 

Keeping All Costs in Check

Unfortunately, you might find out that your costs are rising, but there is no corresponding boost in your profits. When this happens, it can be concerning, and you need to make a few changes. You might want to cut back on your food orders or reduce payroll expenses. While you need staff members and supplies to keep the doors open, trimming down those expenses can help lower your costs below that 30 percent mark.

There are a few ways to make those cuts. You will want to review the food order before submitting it. Some items might not be needed for the kitchen. Take time to check those schedules for the staff. Some weeks might be oversaturated with crew members. Your managers are often not prudent with money. For that reason, you need to have a handle on your expenses. If you want to outsource the job, make sure to connect with an experienced accountant or bookkeeper.

You should also check out those other areas in your restaurant. Make sure that supplies are being used and not wasted. When you reduce spoilage in the kitchen, it can also help to save money. You can outsource some jobs for your restaurant. For example, if you are paying staff to do the laundry, consider looking into a cheaper alternative by outsourcing the work.

Costs will vary depending on the type of restaurant. Food trucks have fewer labor costs than a traditional family-style eatery. Those food costs will be higher for a fine-dining restaurant than a hot dog joint. For that reason, you want to focus on the percentages rather than a dollar amount when you need to plan a budget.

 

Issues for South Jersey Restaurants

New Jersey is not known for being friendly to businesses. Remember to budget the fees and other costs for municipal licenses. If you don’t plan for these expenses, you could be blindsided when going through the proper regulatory procedures.

Many restaurants in New Jersey have opened as bring your own bottle (BYOB) establishments. With that, you can avoid the liability and expenses of a liquor license. If you want to serve alcohol in the restaurant, you will need to obtain a permit, which is another expense. Plus, you may want to pay for your employees to get a certificate to serve alcohol to the customers.

Along with these costs, think about hiring an attorney and accountant. These professionals should be familiar with the hospitality industry. They can help educate you on food costs and liquor distributors to save on expenses. You want to ensure that you join the New Jersey Restaurant and Hospitality Association to connect with other professionals in the industry.

 

Need an Accountant for Your Small Business?

If you are opening a new restaurant in South Jersey, you need to find an experienced accountant. At TMD Accounting, we have over 40 years of experience helping small business owners with financial management, tax services, and payroll. You can schedule a consultation by calling 1-856-228-2205.