Running the day-to-day operations of a restaurant is already a hectic job, but when you sit down to crunch numbers, things can start to feel very overwhelming. Restaurant accounting is critical to a successful business, but is often overlooked (or avoided) due to the difficulty in tracking and interpreting all those numbers.
Fortunately, there are many ways to simplify and streamline the accounting process so you can stay on top of everything without sacrificing your sanity. Here are a few tips we swear by.
Learn the Language
Unless you were a CPA in a previous lifetime, chances are good that your accounting knowledge is not expansive, and that’s okay! Learning the ins and outs of accounting can feel like trying to decipher a new language. Terms like profit-and-loss, prime cost, net revenue, and others often lend themselves to more confusion than information. Never fear, though; there are many tools you can use as your Rosetta Stone. Sites like Investopedia can give you a basic knowledge and overview of accounting so you can get your bearings without feeling too overwhelmed.
Use the Right Tools
It’s also extremely important that you use the right tools to help you simplify your financial records and organization. These days there are a multitude of options when it comes to bookkeeping software. Rid your mind of daunting spreadsheets and consider looking into a software program that’s easy to use, secure, and cost-efficient. Some of these programs even have automated features specific to restaurant accounting that will do the heavy lifting for you.
Choose a Good POS System
One of the most significant ways you can simplify your accounting is by choosing the right point-of-sale (POS) system. Restaurant owners will often overlook the connection between a front-of-house payment system and bookkeeping, but optimizing both can make accounting a much easier task. Suppose you could link your point-of-sale system to your restaurant accounting system so that you could track inventory costs, labor costs, and payment methods. That would be life-changing, wouldn’t it?
Pay Attention to Sales
This might seem like a no-brainer, but paying close attention to your sales is crucial to keeping the books on track. These days, the majority of transactions for any business are processed with credit or debit cards. The majority of credit card terminals require you to close out your batch of transactions every day. Then, the credit card company transfers the funds to your bank account. Since money is deposited daily, your bookkeeping must reflect that activity-where money has entered and exited.
In the restaurant industry, your food and beverage (in addition to labor) costs are the largest expense. This means that tracking inventory is imperative and can be a make-it-or-break-it factor for your business. Calculating your restaurant’s food cost percentage can give you an idea of how inventory affects the bottom line. You can use the following equation to help you find your food cost percentage. (Beginning Inventory + Food Purchases – Ending Inventory) / Food Sales = Food Cost %.
Not unlike any other business, restaurants have expenses. Monitoring those expenses and keeping them under control is one of the most effective ways to ensure your business’s profitability. Make it easy on yourself. Start out by entering and paying your bills once a week. With time, you may find that while sales need to be recorded each day, expenses need only be recorded every two weeks. How you pay those bills makes all the difference.
Financial reporting will be your very best friend when you start getting into the nitty gritty of restaurant accounting. These reports give you both an in-depth and a higher-level view of what’s going on behind the scenes. Financial reports can also provide insight into how to improve your restaurant’s performance. This is why regular reports are so important.
Consider Outsourcing Accounting and Payroll
Finally, you may decide you’d rather leave the accounting to the experts—and there’s nothing wrong with that. For many restaurant businesses, it’s more cost-efficient to outsource bookkeeping and payroll services instead of the owner spending valuable time on finances in-house. Additionally, you won’t have to worry about the latest payroll compliance laws or any mistakes made with payments. Trust us; it’s better to hire a professional to handle your restaurant’s payroll so you don’t have to worry about keeping up with all the complicated changes.
All in all, restaurant accounting can be a complicated endeavor, but if you take the time to learn the basics or even outsource to an expert, you’ll be well on your way to becoming a successful business.
At Pacific Accounting & Business Services (PABS), we focus on providing high-quality accounting, finance, and related back office services to businesses across the country. Learn more by giving us a call today.