When you come from a cooking background, balancing finances might seem overwhelming, to say the least. But as a restaurant owner — any small business owner — it’s imperative to be on top of your finances and make sure you understand what’s happening in your business. Here are some helpful tips to keep in mind as you get started setting up a restaurant bookkeeping process.
1. Set up restaurant bookkeeping software.
Old school owners often lean into pen and paper restaurant bookkeeping. If it’s not broke, don’t fix it, right? But that method is probably not as efficient as you think it is, and it’s very easy for important information to fall through the cracks.
Utilizing the bookkeeping software on the market today allows your business to better streamline your finances. And if you don’t come from a number crunching background, don’t worry — thus software tends to be designed to help those new to restaurant bookkeeping learn the ropes in a straightforward way.
Some software brands are specifically catered to restaurants and their programs can connect directly to your POS system. In fact, this might be the right time to upgrade your POS system to modern technology, too.
2. Make recording part of your routine.
Updating and reconciling your financial records is a huge part of the restaurant bookkeeping process. Not only will it give you a clearer picture of where your business is heading, but any big discrepancies could be a sign of employee theft or major food waste. You want to make sure you stay on the ball with your recording so any problem gets found early.
A few metrics to keep in mind:
- A profit and loss statement should be done once a month.
- Counting inventory should be done at least monthly, but weekly is even better.
- Reporting on labor and food costs should be done once a week.
Getting into the habit of these best practices is in many ways the hardest part. Just your cleaning process and ongoing training programs, it’s all about repetition and making it part of your regular routine as a business owner.
3. Evaluate inventory costs.
Unlike many retail industries, inventory costs for restaurants can fluctuate wildly, even week to week. Maybe a drought has affected broccoli farmers. Or maybe disease has affected how much cod your fish supplier has in stock. It could also just be you’re ordering asparagus even though it’s out of season.
These are all ways the price of inventory can go up quickly. By regularly evaluating your inventory costs, you can more confidently decide if you need to make changes to your inventory ordering, your menu prices, and to your menu at large.
4. Layer your bookkeeping tasks.
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 an efficient way to get all the bookkeeping done quickly so you don’t have to worry about it, this can actually be less efficient.
Crunching numbers, evaluating spreadsheets, and comparing order forms can become draining if you’re spending several hours on it at a time. Besides your productivity slowing down as you get mentally exhausted, you’re also going to start making mistakes.
You might be working hard, but you’re not working smart.
Instead, try grouping bookkeeping tasks together and schedule each group for a different day. Getting your other work tasks done in between will bring variety to your schedule. This allows you to be efficient with your mental energy, and you can come back to your restaurant bookkeeping with a clear head.
5. Hire an accountant.
When it comes to the larger picture elements of restaurant accounting, you probably want to hire a professional accountant. Not only can they help you when tax season comes around (and you definitely want a professional helping you get as many deductions as possible), but a restaurant accountant can also advise you on long term finances.
Need insight into if you can afford to upgrade your kitchen equipment or remodel your bathroom this year? Part of your accountant’s job should be to know what options you have, or at least what plan should be put in place so you have those funds down the line!
Now, best practices are for you and your managers to still handle the day-to-day recording for your business. Management being at the restaurant in-person offers a special point of view of the finances on a micro level, so a lot of the bookkeeping should still be done by you or your management team. But the other benefit of hiring an accountant is they can look at your current day-to-day bookkeeping system and give advice on how you can be working smarter, not harder, on balancing the books.
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Rewards Network® does not provide tax, legal, or accounting advice. 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.