Running a small restaurant takes so much more than just cooking good food and providing great service. As an owner, one important thing you cannot afford to overlook is finances and accounting.
It is pretty much common sense that if you want to run a successful business, you need to keep a detailed record of all your finances. And small restaurants are no exception.
This means that even if you’re buying a grill from https://barbecuesgalore.ca/ for your restaurant, if you fail to keep a record of the transaction, you could end up in a lot of legal trouble.
So, how do you manage your accounting, you ask? Also, learn about the Vital Role of Accounting in Business by reading this article.
In this blog post, we will share with you some tips that will help you manage the accounting records for your small restaurant with ease.
What Does Accounting Mean?
Accounting is basically the process of keeping track of all the finances and transactions that are made in a business. It involves everything, from tracking where you’ve spent money, what you’ve earned, and how much you’ve paid, to managing payroll and operating costs, among other things.
In simpler words, it pretty much covers everything that involves money for your small restaurant.
How Can You Manage Accounting for Small Restaurants?
If you’re confused as to where to start, here are some of the basics to get you up and running with your small restaurant accounting.
Plan Everything and Set Up Your Books
Before you can even get started with your accounting, you need to first set up your books to record of all the financial transactions for your small restaurant.
Take your time and map out everything. This can include all kinds of transactions your restaurant makes. Record all the income sources, what expenses you’ve had, what you paid the employees, etc.
Compile any and all financial data in a single place, this will make setting up your accounting a lot easier.
DID YOU KNOW?
You’ll have at least 7 categories in your restaurant chart of accounts. They are assets, liabilities, equity, revenue, COGS, expenses, and “other.” Each one of these categories is tied to helping keep your financial records clean and organized.
Update Your Income and Expenses Report on the Daily
When you’re doing accounting, it is important that you have a record of your daily revenue, expenses, and other sources on a schedule. As a small restaurant, there are some main sources of revenue and expenses that you need to keep an eye on.
- The Revenue
For the money that comes in, track things like all income from sales, takeaways to deliveries, upsells, merchandise, etc. - The Expenses
For what you spend, make sure that you record all the places you’re spending money.
For example, track payroll and tips for employees, utilities and rent, insurance, and liabilities, as well as any money you spend on advertising and marketing.
Take your time to review everything to make sure that all the records are accurate and up-to-date. And remember to keep all your receipts and invoices safe. They can come in handy when you’re going through an audit or for tax purposes.
For example, cleaning and maintenance are major expenses for any restaurant. After all, you’re dealing with food here. Hygiene is part of great food and service.
A clean grill is essential for both hygiene and performance. So, if you’ve spent on specialized grill cleaning solutions, to extend the life of your grill, save the receipt in your hand. It may just save you some money during tax season.
Double Check Your Accounts
You know, reconciling is also a major part of the whole accounting process. It helps you verify every transaction across accounts so that your final balances match.
So, if you find anything missing, this means that something has not been added or you’ve done your math wrong. Make a habit of rechecking all your accounts at the end of your shift. It may just save you from paying hefty fines to the IRS.
Setup a Process for Your Accounts payable and Payrolls
Keeping track of all the payments in a restaurant can be hard and you might even forget some if you’re doing it all by hand. You need to set up an easy-to-follow process for all your accounts payable and payroll.
Use the help of a professional or automate it with accounting software. This way, you’ll never miss a payment and you can ensure the smooth running of your restaurant.
Common Accounting Errors That You Need to Avoid
It’s not always smooth sailing when you’re running a busy restaurant. Mistakes can happen. The same is true for accounting. But the only difference is that you can easily solve operational mistakes. Why? A hiccup in accounting can cost you a hefty amount.
Here are five of the most common accounting errors that you need to fix or avoid:
1. POS Transactions and Expenses
One of the most common errors on the list. For example, tips and sales tax not being included with sales, any discounts and comps not being separated in your P&L report, etc.
You need to train your staff to avoid making these small mistakes, you can also teach them to use the cash basis method to keep track of their accounting daily.
2. Have a Solid Inventory Record
You need a good idea of what’s in your inventory at least. Keeping track can let you know what your restaurant needs to run on daily. By being on top of it, you can avoid making random purchases and adjust your budget accordingly.
3. Any Third Party Service Providers
These days, getting your delivery through service providers like Uber Eats and Doordash is pretty common. With so many deliveries going out at a time, some restaurants forget to add these to their accounts. This is a big mistake.
Add deposits from these providers minus all commissions, marketing, delivery fees, and tax, and record them in a separate account.
More than 67% of restaurant owners use the accrual basis to track their finances, and about 31% use the cash basis. Yet some do now know which way to use.
Conclusion
Keeping a record of all the accounting for your small restaurant does not have to be such a long and hard process. By making a habit of record keeping, double checking, and getting a little bit of help from software, managing your accounting will become a lot easier.
By following these simple tips, you can make sure that your restaurant’s financial records will always be accurate and up-to-date. This means that you can make better decisions and increase profits and growth.