Financial metrics simplify your restaurant’s accounting data and provide useful benchmarks for assessing business performance. Tracking metrics over time, such as sales and costs, can provide insight to refine and improve the business. Restaurant owners commonly use the following benchmarks and key performance indicators (KPIs) to evaluate their financial performance. A restaurant bookkeeper oversees the financial reports of the restaurant. They ensure that the figures are accurate, track inventory, and meet tax obligations.

• A professional bookkeeper will record and organize important financial transactions, capturing daily sales for instance.
• Your inventory includes all the ingredients and supplies needed to create your dishes and present them to diners.
• Your cash flow report (or statement of cash flows) tracks the flow of cash.
• To miskey numbers when you’re entering row upon row of data is also human.
• This could mean reducing operating costs or finding ways to generate more income to cover debts.

Most restaurants use the cash method, while most other businesses use the accrual method. How many times have you had to double and triple-check numbers because the amounts you have on your Excel spreadsheet don’t match what your bookkeeper has in their system? They have to dig through to find the invoice (assuming it’s not also missing), the books aren’t balanced and it’s a huge headache for everyone involved when both sides how to do bookkeeping for a restaurant don’t say the same thing. The second pain point Christian tells us your bookkeeper wishes you knew about is inconsistent POS usage. “Just like having a consistent process for getting your invoices into accounting, consistent POS use for everything – really, everything – is incredibly helpful for your bookkeeper,” he says. In some cases, restaurants may turn to outside collections agencies to help them recover unpaid A/R.

Cost of Goods Sold (COGS) and Prime Costs

Software can link to your business bank account, act as accounts payable or receivable, take care of payroll (and payroll taxes) and more. Receiving timely financial reporting is crucial so that restaurant owners, chefs, and managers can make decisions to improve prime costs, operational expenses, and the bottom line. Using the right technology can make all the difference for a busy restaurant owner. The following point of sale (POS) system features can streamline the overall accounting process. To streamline the accounts payable process, some tools offer AP automation, an end-to-end AP solution.

• The A/R account is used to track these outstanding balances and ensure that they are eventually paid off.
• This account is used to track money that the restaurant owes to suppliers and other creditors.
• To put it lightly, it’s pretty intimidating – not to mention time-sensitive, time-consuming, and accuracy-dependent.
• We have skilled restaurant accountants that are experts in using the latest technology for accounting purposes and can provide you with real-time financial reporting.
• Only tips in excess of the minimum wage are eligible for the credit.
• This financial reporting helps you manage your cash flow, understand problems, find efficiencies and keep an eye on your restaurant’s financial health.
• They ensure that the figures are accurate, track inventory, and meet tax obligations.

This is the money customers owe the restaurant for goods/services they have been provided but not yet paid for. The A/R account is used to track these outstanding balances and ensure that they are eventually paid off. The profit and loss or income statement shows the restaurant’s revenue, expenses, and profits over a specific period.

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Restaurant owners have many factors to consider when it comes to restaurant bookkeeping. Ideally, your accounting software will integrate with your POS system, and you can track multiple locations, if needed, and update the cost of preparing recipes based on daily food prices. Employee scheduling, sales forecasting, and electronic data exchange (EDI) with vendors are also key functionalities. Other components include payroll, automated A/P, and inventory management. It’s generally best to pair your POS system with a dedicated software-based restaurant accounting system for more robust coverage.

We’re going to assume you’re not an accountant (if you are, you’re probably not reading this article), and so we’re going to tell you some common mistakes to avoid, too. Finally, your restaurant’s success will be measured against key performance indicators. KPIs are what you’ll obsess over as a business owner – they dictate the financial outlook of your restaurant. Reconciling accounts keeps you aware of lost checks, incorrect deposits, or cash variances.

Handling Accounts Payable

With organized financial practices and relevant, sophisticated reporting, bookkeeping can help you create a strong foundation for your business decisions. Bookkeeping involves day-to-day finances and budgets, but effective bookkeeping practices also can help you make operational decisions about food, labor, and overhead costs. Record a separate daily sales entry for each day (not monthly or weekly). With this method, you are mimicking how the cash and credit card deposits hit the restaurant’s bank. Most restaurants accept credit cards and settle the batch on a daily basis.

Even for the most experienced, accomplished restaurateurs, restaurant accounting is like a foreign language. What’s the difference between accountants and bookkeepers and accountants? Restaurant accounting is a complex process with many moving parts measured against industry standards. To put it lightly, it’s pretty intimidating https://www.bookstime.com/ – not to mention time-sensitive, time-consuming, and accuracy-dependent. Even though restaurant accounting is daunting, understanding the basics is not impossible. Let’s go over the steps you need to take to set up your restaurant accounting, as well as helpful software solutions that will make this job easier.

Consider Outsourcing Payroll

While this might sound like a good way to get all the bookkeeping done quickly, this can actually be less efficient. 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.

I would take a hard look at Gusto Payroll services as an alternative to ADP. Both XtraChef and MarginEdge allow you deeper COGS and financial insights and controls directly in your POS system. It will require an additional reconciliation (if you have a good bookkeeper) of the Bill.com clearing account. You should see the information for your QBO account and can change any information through settings. One of the reasons we love connecting to QBO and to any restaurant POS system from Shogo is the steps and amount of time it takes.

A Beginner’s Guide to Restaurant Bookkeeping and Accounting

While the hospitality sector reopens across North America, owners and operators face a whole new set of challenges. Download our free playbook and learn how to build a more resilient business post-pandemic. If you are already using Toast for your POS system it makes sense to consider their payroll service since your payroll data can easily be pulled from Toast. Obviously, you run into a lot fewer issues when two sister systems integrate together.

• Instead, try grouping bookkeeping tasks together and schedule each group for a different day.
• By mastering accounts payable, you can ensure bills get paid on time while preventing late fees or disgruntled suppliers.
• Connecting your accounting software to your POS will automate the collection and organization of transactions and financial data.
• You should also ensure they’re familiar with the restaurant industry and have experience dealing with tax laws and regulations.