Many restaurant owners have a passion for food and devotion to the hospitality business. You might think that an exceptional chef and a customer-focused attitude are the only two ingredients for a successful business. However, setting up a restaurant accounting system is crucial for your business. With this system, you can monitor your profit margins while still analyzing those other key performance indicators.
What To Know About a Restaurant Accounting System
Your restaurant’s accounting system is vital whether you have a new business or need to implement a better financial strategy. These accounting systems not only track the financial transactions, but you can prepare reports, gather all the data for taxes, and summarize your financial information in an easy-to-understand format.
With that information, you can make the best decisions for your restaurant. These decisions can minimize costly expenses and boost your profit margin. You could decide not to use an accounting system, but you will be left with messy finances that must be unscrambled for tax time. An accounting system helps you track all the numbers for a clearer picture of your restaurant’s financial health.
Implementing a Restaurant Accounting System
There are several steps to setting up an accounting program. Make sure to follow these tips for a successful implementation of the system.
Hire an Experienced Accountant
Consider using small business accounting services for the first step of the implementation. You will need help to set up a restaurant accounting system. Keeping accurate financial records is important, especially when you need to make business decisions for your restaurant. Taxes are frustrating. These records can help to complete the tax filing process. A professional accountant understands all the tax implications that can affect your restaurant. Plus, an accountant can make a few suggestions to help select the right software for your business.
Select the Right Accounting Software
If you are searching for the best restaurant accounting software packages, there are several options. Make sure to choose one that you can use and understand. Once again, an accountant can help you with this step. You should choose one with solid financial analysis features and reporting options. All of the software should generate profit and loss statements for your business. Think about choosing a software system that tracks accounts receivable and payable, generates invoices, and manages employees’ schedules. Those robust options provide you with the best tools to oversee your business.
Accounting for a restaurant can be complicated, especially when you need to track the different salaries, workers’ tips, and other sources of income. Before you choose accounting software for your restaurant, ask for advice from your accountant. These professionals will know what you need in a software system.
Choose Your Accounting Method
Before choosing your accounting software, decide whether you need a single-entry or double-entry option to manage your books. Since many restaurants have inventory, it is advisable to select software with double-entry bookkeeping.
Another crucial decision is whether to use accrual or cash accounting. Consult your small business accountant for this decision. You might want to select accrual accounting since it provides you with the most accurate financial picture by recording expenses and revenue. Most of those records are tracked in real-time as the transaction occurs in your restaurant.
Choose a POS System
No matter the size of your restaurant, choose the right point-of-sale (POS) system to manage cash and credit transactions, send receipts, track inventory, and report on other details. You can quickly implement a POS system that works with your accounting program for a hassle-free way to manage your business.
Tracking the Restaurant’s Flow of Funds
With a restaurant accounting system, you can keep track of specific accounts for your business.
These flow of funds include:
Payroll can be challenging for even the most experienced restaurant owner to manage. Many of the workers have different rates of pay. You can outsource your payroll services or use payroll software to keep track of these expenses.
All restaurants will have inventory on hand. Remember that there are two classes of inventory: supplies and food. If you have too much stock, it often ends up as waste. On the other hand, too little inventory can hurt your sales and drive away customers. Some accounting software can help you track your daily inventory so that you can find the middle ground between profit and loss.
As a restaurant owner, you rely on supplies to operate your business. If you don’t have a handle on your finances, then you might miss paying those invoices. Accounting software helps manage those bills and maintains a long-standing relationship with vendors and suppliers.
You need to keep track of the amount of cash that goes into and out of your restaurant. Accounting software helps you create statements to track your cash flow on a daily, weekly, monthly, or quarterly basis.
All restaurant owners need to track their sales. Accounting software helps you see how much money comes from beverages or food items. You can break down the sales from carry-out meals, eat-in meals, and even different menu options on these platforms.
Cost of Goods Sold
The cost of goods sold (COGS) can distinguish your food and supply costs from other expenses for your restaurant, such as rent or utilities. These accounts list your occupancy costs as expenses while the supplies and foods are identified as COGS.
As you can already tell, an accounting system is vital to help manage your business and keep it profitable for many years to come. Without the right software, you could lose track of your cash flow, miss out on invoices, and lose money on your inventory. Make sure to reach out to an experienced accountant who can help you find the best system for your restaurant.
With help from TMD Accounting, you can finally manage those financial records for your business. Thomas M. Ditullio Accounting has over 40 years of experience. His team provides a wide range of services in Gloucester County, such as financial management, payroll, and tax services. You can schedule a consultation by calling 1-856-228-2205.