Restaurant Bookkeeping vs CPA Services: What You Need to Know

Usually, about a third of a restaurant’s gross revenue goes towards paying for COGS. It’s an important number for your business, so check out our complete guide to learn more about COGS and grab a formula to help you calculate it. Any account that gets a statement with a beginning and ending balance can be reconciled. Account reconciliation ensures that you are looking at accurate financial reports.

Account reconciliation proves that you’ve accounted for all transactions – and that the amount of cash in your checking account is actually correct. Note that modern accounting software can automate account reconciliation. You and your accountant can use your P&L to review the total revenue and expenses of your business over a period of time. You and your accountant will work on certain bookkeeping and accounting tasks together. You’ll also want to know enough about accounting to monitor financial KPIs that will help you make business decisions on the fly. A restaurant profit and loss statement, or P&L, keeps all restaurant accounting information organized in one concise document.

Checklist for a Cash Audit

Just like your cleaning process and ongoing training programs, it’s all about repetition and making recording the financials a part of your regular routine as a business owner. Some bookkeeping software brands that specifically cater to restaurants can connect directly to your POS system. In fact, depending on how old your current system is, this might be a good time to upgrade your POS system too. If you come from a predominantly culinary background, the thought of balancing your restaurant’s finances might seem overwhelming.

This equates to a whopping ten percent of the entire workforce in America, and most of these workers are hourly and part-time staff. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. However, if you make it a point to regularly evaluate your inventory costs, you can more confidently decide if you need to make changes to your inventory ordering, your menu prices, or your overall menu. Companies that provide restaurant CPA services or independent CPA restaurant experts are highly recommended — and restaurants should consider hiring them. Many states require an applicant to have 150 credit hours of college education (including hours in specified accounting and business courses) just to sit for the exam.

Using the wrong accounting method

We recommend monitoring prime costs on a weekly basis to track fluctuations in expenses and identify areas where you can cut unnecessary costs. A restaurant’s food costs can fluctuate based on many factors, including seasonality or natural disasters. Your CoGS is based on your inventory, and it directly affects the profit you make on menu items. By calculating and tracking your food costs, you can help ensure a healthy profit on each plate and make informed decisions about menu price and menu engineering. Tracking your inventory and food costs can also help you maintain more accurate inventory management, minimizing waste and theft.

The restaurant industry is known for tight profit margins, and without financial reporting, you are running your business blind. Analyzing your restaurant financial and operational data regularly is one of the keys to a healthy bottom line. By looking at a few essential reports, such as your profit and loss (P&L) statements and your prime cost (food and labor costs), you can accurately track your restaurant.

Connecting Shogo to Your POS System

They’ve done a fantastic job of keeping this seamless integration easy.

Restaurant bookkeeping involves financial and accounting practices that track your detailed costs and revenue. 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. Point of sale (POS) systems are computer systems used to record orders and complete payment transactions. When it comes to managing your books and records, some POS systems allow you to track inventory counts, labor costs, and methods of payment as well as run sales reports. A business strategy, organization, and the willpower to keep accurate accounting records are essential factors in determining whether or not your restaurant will get off the ground.

Review Your Profit and Loss Statement Daily

Once you’re behind on your restaurant accounting, it is difficult to get caught up. Ideally, labor costs should take up less than 30 percent of the revenue according to industry standard. However, it depends https://www.bookstime.com/articles/restaurant-bookkeeping on the type of restaurant you run, as costs may be higher or lower. To calculate the costs, divide the staff into groups of back-of-house and front-of-house and figure out which group is costing you more.

Cost of Good Sold (COGS) is a KPI that shows how accurately you’re pricing your food items and controlling your inventory. Keeping track of your COGS ration will help you reduce and maintain your inventory costs. Prime cost accounts for all your labor costs and your cost of goods sold. For every dollar you earn, the prime cost is the amount of that dollar that goes to labor (your staff) and product (food items). There are a few essential bookkeeping processes that are essential to restaurant accounting.

Bookkeeper for Restaurant Group

Many business owners make the mistake of scheduling time for all their restaurant bookkeeping responsibilities on the same work day. While this might sound like a good way to get all the bookkeeping done quickly, this can actually be less efficient. You will see how your revenue, prime costs, and expenses compare against all of our other restaurants clients. Calculating payroll in the restaurant industry can sometimes get a little tricky for a business owner who is dealing with multiple wages, employees coming and going, and irregular work hours. There are also benefits, insurance, and federal and state tax obligations to keep up with. A balance sheet spells out the restaurant’s equity, liabilities, and assets during a specified time frame.

A POS system does a lot of heavy lifting in a restaurant, but it’s prone to user error. When you enter menu items into your POS, check that they’re coded correctly to https://www.bookstime.com/services ensure accurate food and beverage costing, but even more so for tax tracking. It’s extremely important that your accounting software integrates with your POS system.

Understanding Cash Shortage & Overage in the Income Statement

The more you can monitor the financial health of your restaurant, the better. MarketMan can level up your operational workflow by seamlessly integrating your bookkeeping, POS and inventory management solutions. Every restaurant has overhead, or fixed costs of running your business, such as rent, insurance, and equipment rental. This ratio can be calculated on an hourly, daily, or monthly rate, and will give you insight into how much your restaurant costs to run. Your restaurant’s success will be measured against key performance indicators (KPIs) which will be measured through financial reporting and analysis. Here are some important ratios to study when you review the financial statements for your restaurant.