Kitchen to Cash Flow: Restaurant Bookkeeping Guide

Regular inventory reduces food waste and helps you save on orders since you’ll never have to scramble to order an item you didn’t realize you were low on. It’s easy to let invoices pile up and forget to regularly reconcile your accounts, but doing so can have costly consequences. Maximize your restaurant’s profitability with this essential eBook.

Overlooking Daily Sales Reports

Start by selecting accounting software that aligns with your business operations, such as tracking financial transactions and creating profit and loss statements. Modern restaurant accounting software integrates directly with POS systems, payroll, and delivery apps to automate financial reporting. It serves as the bedrock for your restaurant accounting software ecosystem, crucial for mastering restaurant bookkeeping. They track income, expenses, and sales, handle payroll processing, manage accounts payable and receivable, and prepare essential financial statements like profit and loss reports. Strong bookkeeping practices enable restaurants to maximize efficiency, reduce costs, and maintain financial stability.

Let’s say Company A discovers that its bank balance is $300 smaller than its cash account balance. This ensures that your records are accurate, sparing you the potential consequences of misreported income, missed payments, or cash shortages. The most common type of account reconciliation is bank reconciliation, which checks whether the transactions on your general ledger line up with the transactions on your bank account. Because your debits equal $15,000, and your credits equal $4,000, you get a balance of $11,000 at the end of the accounting period. Here is an example of a general ledger table for the cash account. Typically, you make this calculation at the end of the accounting period.

Understanding Your Restaurant Income Statement

It’s not just about paying your team on time – it involves tracking hours, calculating wages, managing taxes, reporting tips, and staying compliant with local and federal labor laws. Keeping receipts, invoices, and bills organized is also essential for verifying expenses and supporting potential deductions.In addition, reviewing your expenses regularly allows you to spot trends or spikes that may indicate inefficiencies. Regular maintenance prevents backlog, reduces errors, and keeps your financial picture up-to-date. This includes categorizing and storing all receipts, invoices, bank statements, payroll records, and tax documents. The goal is to create a process that is both reliable and manageable, even if bookkeeping is not your area of expertise.Choose the Right Bookkeeping MethodThere are two primary bookkeeping methods – manual and digital. Liabilities – Money your restaurant owes, including loans, unpaid bills, or outstanding vendor payments.5.

Reconciling Bank Statements and Handling Cash Flow

Prime costs account for all the costs required to produce and distribute your product. Prime costs are one of the most important KPIs for restaurateurs. Here is the ultimate list of restaurant business KPIs you’ll lose sleep over. Payroll also keeps a financial record of deductions, bonuses, vacation, sick time, and overtime.

This may include traveling to the restaurant periodically to pick up invoices, deliver reports, do the data entry, etc. XtraCHEF not only saves me A LOT of time, but it has also given me the tools to transform the relationship I have with my clients and change the way I manage my business. Restaurant bookkeeping is more than just the process of recording and organizing transactions. If you prefer manual bookkeeping, you can use financial report templates to guide yourself through the process of transferring ledger information. The cash flow statement helps you evaluate your restaurant’s liquidity, flexibility, and efficiency in generating cash.

Restaurant Accounting Basics: What You Need to Know and Why

The multitude of industry-specific challenges restaurant operators deal with has a powerful impact on bookkeeping needs. Journals and general ledgers are the two primary locations for logging financial transactions. These tasks help keep financial data organized, accurate, and up to date. Restaurant bookkeeping helps you build a strong foundation for your financial future.

Perishable inventory

Having a detailed and tailored chart of accounts ensures your bookkeeping records are clear and that you can generate meaningful financial reports.Establish a RoutineFinally, consistency is critical. Digital bookkeeping generally means using computerized tools to organize and track financial data. That’s why accurate bookkeeping is not just a bureaucratic task but a vital part of managing your restaurant’s financial health.Key financial terms you’ll encounter include1. Most of all, they know that their restaurant bookkeeping services are driven by their pace, not mine. With xtraCHEF, my clients can rest assured that their numbers are accurate, that the data is timely, and financial reports and dashboards are always up-to-date.

High daily transaction volume

Restaurant accounting can be intimidating – to put it lightly – because it’s a complex practice with many moving pieces measured against industry benchmarks. That helps you keep on top of the business insights that could make or break your business. Fraud and waste will be the order of the day, running your precious business to the ground. Failure to keep on top of this will result in mismanagement of stock, losses and an inaccurate overview of the business. With so many software options available there’s no reason why you shouldn’t capitalise on what’s available to you so that your job is quick and error-free. One that details what happens at each stage of the accounting cycle.

Even a well-tuned QuickBooks file chokes when you try to paste thousands of delivery-app deposits or vendor receipts. Use Classes for revenue centers, such as dine-in, bar, catering, or events, or for physical units within a multi-location group. QuickBooks has long been a favorite among small businesses. Adhering to Generally Accepted Accounting Principles (GAAP) often involves using consistent accounting periods for meaningful comparisons. This is a critical area where many restaurant managers and bookkeepers, and accountants need specialized knowledge. This demands precise tracking of your cost of goods sold (COG).

Your controllable costs are the restaurant expenses you can control. You and your accountant can use your P&L to review the total revenue and expenses of your business over a period of time. While you won’t leave this article a chartered accountant, we’ll give you the language you need to work with accountants and with restaurant accounting software. How to I evaluate restaurant accounting software? Your gross profit tells you how much money your restaurant has made in sales after the cost of the items needed to make those sales has been deducted. With any process for restaurant accounting, whether you’re using software or manual processes, these key accounting formulas are needed to help you get a clear picture of your profitability.

• Your financial forecast gives you a rough estimate of how much revenue you’ll generate in the future.
• You and your accountant can use your P&L to review the total revenue and expenses of your business over a period of time.
• Account reconciliation also catches accounting errors and keeps track of your transactions.
• Inline editing allows you to correct data in SaasAnt before it is imported into QuickBooks, ensuring accuracy from the start.
• Each accounting entry, as unimportant as it may seem, plays a crucial role in helping you to spot issues, increase profit and prevent loss.

Revenue – The total income generated from all sales, including dine-in, takeout, delivery, catering, and any other services.2. However, alongside crafting menus and designing the perfect ambiance, there’s an essential element that often gets overlooked – bookkeeping. Boost the speed and efficiency of your restaurant operations using how to master restaurant bookkeeping in five steps our downloadable templates.

• Gross revenue is also sometimes referred to as turnover or sales turnover.
• Generate Financial Reports RegularlyBeyond taxes, consistent financial reporting gives you valuable insight into your restaurant’s performance.
• Examples of accounts include cash, inventory, sales, and expenses.

But as a restaurant owner, it’s imperative that you stay on top of your finances to make sure you understand exactly what’s happening at your business. If you’re looking for someone to take care of your multi-location restaurant group’s accounting, you should get in touch with our experts. Infrastructure and resources must maintain the pace of growing restaurant businesses. You should examine this profit and loss statement to look for issues as well as opportunities in order to assess the profitability of each restaurant location. This will enable you to track the profitability of every restaurant as well as the restaurant group as a whole. Here, QuickBooks’s class tracking feature is useful in separating the income and expenses for the various restaurant locations.

You don’t need restaurant bookkeeping stress on top of it. The integration keeps your restaurant bookkeeping up to date every single day. After outsourcing bookkeeping and implementing POS-driven metrics, their profit margins improved by 8%, funding new outdoor seating. The restaurant industry is fast-paced and vibrant, but that same energy brings financial chaos if numbers aren’t tracked properly. When people think of restaurants, they imagine sizzling cuisine, clinking glasses, and joyful conversations.

You can generate a profit and loss report by class to see a profit and loss statement for every location as well as a summary of all of them. An overcomplicated chart of accounts may make understanding reports difficult for owners. Accounting charts determine the structure of expense and revenue reports, as well as how they appear.

Record Sales Through PoS

Unlike other bookkeeping processes that we ask restaurants to engage in, using xtraCHEF is REALLY easy and is minimally disruptive to busy restaurant environments. Implementing xtraCHEF has transformed my restaurant bookkeeping services. Because xtraCHEF has helped to standardize the procedures of our restaurant bookkeeping services. However, life after xtraCHEF means A LOT less data entry and A LOT more time to focus on my clients business.

The first step in good restaurant accounting lies in gathering the right information. Then you have the crossover between restaurant accounting and restaurant management. From business owners, to HMRC, there are plenty of third-party observers and stakeholders who need an accurate record of accounts to see how things are (or aren’t) performing. Secondly, accounting in a restaurant isn’t a “nice to have” like marketing or HR may be. Each accounting entry, as unimportant as it may seem, plays a crucial role in helping you to spot issues, increase profit and prevent loss.