Accounting is an essential part to make your restaurant business successful. But it is not as easy as it seems, keeping your financial data on track is a complicated process because it requires a lot of efforts and time. Without proper accounting and bookkeeping, you cannot run your business successfully.
Most of the restaurants fail because of high expenses, poor accounting and failure to review financial reports to make timely adjustments. To ensure your restaurant’s long term financial stability and streamline your business operations.
Read the top restaurant accounting tips to manage your finances efficiently:
Keep bookkeeping records accurate
Managing your accounting books is the complex but the most important part of running a restaurant. You should keep a record of all the money that is coming and going from your restaurant. It not only helps to analyze the profit margin, but it also helps your restaurant to stay away from IRS penalties.
Record all the sales and transactions regularly in accounting books to manage your restaurant’s cash-flow and to make financial decisions. If you are still not analyzing and managing your books closely it may be too late to fix problems by the time you catch them.
There are number of options for restaurants to manage their accounting books:
- Accounting Software –Accounting software is a most popular way to keep your finances streamlined. You can choose an accounting software as per your requirements. It makes your bookkeeping activities effortless and saves you a lot of time.
- Spreadsheets –If you don’t have a budget to buy expensive software, using spreadsheets is an ideal option for small businesses. In case if you use accounting software in the future you can easily export all the data from spreadsheets.
- Paper Ledger –This is another option that works for smaller restaurants. But it is very time consuming, need storing space and the data cannot be exported to accounting software in the future.
Keep track of Expenses
It is essential for restaurants to track expenses and keep sales receipts carefully. Expenses are divided into two parts – Prime Cost and Fixed Cost. Prime cost includes food ingredients, staffing, taxes, and beverages, etc. You need to keep a close eye on prime costs and find how to cut costs and increase profits.
Fixed cost does not vary, and you have no control over the changes. It includes the rent of the restaurant, insurances and equipment costs, etc. Track all your prime cost and fixed cost to determine how much money you spend and how much profit you gain.
Create Profit and Loss Statements
Keep the entire restaurant accounting information organized in one document such as food cost, operational costs, and labor costs. Some businesses prefer to make P&L statements on a monthly or quarterly basis. But it is recommended to update P&L statements every week to make your cash flow reports more frequent.
Maintain each record so that your restaurant’s food inventory is not understocked or overstocked. With the accounting software, you can track all your inventory stock and items that have short expiration dates and also schedule as much deliveries and pickups as possible to stay prepared.
Hire an Accountant
Restaurant bookkeeping can be very complex and time consuming for business owners. Hiring an accountant can save your time, makes your process easy and helps you to understand the day to day bookkeeping activities. If you don’t want to hire an in-house accountant, there are plenty of options available; you can hire remote bookkeeper or outsourcing bookkeeping services as per your requirements.