Keeping tabs on your food costs will help you set menu prices and maximize profits. Food costs depend on the type of restaurant, but normally are around 28-35% or revenue. Put simply, prime costs is the sum of your restaurant’s costs to sell its food, drinks and products—your COGS as mentioned above—plus the labor costs of your salaried and casual staff. Industry averages suggest your prime costs should be between 55% and 60%. Accounting software helps you and your accountant stay on the same page.
How do you handle bookkeeping for a restaurant? 5 Easy Steps!
Their skilled team accurately categorizes transactions, covering income from food and beverage sales, as well as various expenses. Reconciling your accounts is the only way to know that you have accounted for all transactions, and it makes you aware of incorrect deposits, lost checks, and cash variances. You should reconcile all bank and credit card accounts, loans, lines of credit, and payroll liabilities.
How to Do Bookkeeping for a Restaurant
P&Ls provide an overview of your restaurant’s revenue, costs, and expenses. Choosing accounting systems for restaurants can help you eliminate the difficulty with restaurant accounting and help you manage your food costs easily. These systems include financial software and point of sale (POS) systems to help you quickly organize inventory counts and execute transactions. In this guide, we will walk you through essential bookkeeping practices specifically tailored to cafes and restaurants. He started in the dish pit and worked his way up to management, where he helped several restaurant owners cut their costs, effectively manage their staff, and fine tune their operations.
- This time would include keeping track of your income and expenses, budgeting, analyzing and comparing costs, maintaining up-to-date employee records, filing payroll reports, and paying payroll taxes on time.
- If you’re unsure, consult an accountant or financial professional to determine the best method for your business needs.
- First, run a profit and loss by going to reports on the left-hand side and selecting reports.
- Reconciliation helps catch any errors, missing transactions, or potential fraudulent activities.
- Unless you’re lucky enough to own space and your own equipment outright, you’ll need to pay for your infrastructure.
- Maintaining accurate financial records, tracking sales and expenses, managing payroll, and staying compliant with tax regulations are essential for the business’s financial health and growth.
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For every dollar that comes in, your prime cost is the amount of that dollar that goes to people (your staff) and product (your menu items). 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 coffee shop accounting reconciliation. While long-term trend analysis is important, you should also log revenue reports on the daily and weekly. You can also use your revenue reports to show you how to set realistic sales targets and evaluate operations. Revenue reports display total expected revenue for a period and how the revenue is split between food and drink.
Monitor progress and celebrate successes
Adhering to tax and accounting regulations is essential for maintaining the financial integrity of your restaurant. By satisfying these obligations, you can avoid costly penalties, maintain trust with stakeholders, and focus on the growth and success of your business. Using restaurant accounting tools can help you track any incorrect deposits, lost invoices, or sales discrepancies.
Owners need to maintain good record-keeping practices to avoid unnecessary audits, fines, and other penalties. Whether you operate a coffee shop, a drive-thru coffee stand, or a coffee trailer, getting your paperwork in order matters. For example, if your restaurant has $3,000 worth of inventory on https://www.bookstime.com/ hand at the beginning of the week and purchases another $2,000 of food products, you have $5,000 worth of inventory. Brown says the advent of cloud-based technology over the past decade has made running the business much better and easier, and helped him drive the business to greater heights.
