More than just hiring a good cook and providing exceptional customer service, running a restaurant has more to it. 

Behind the scenes, there is a complicated financial scenario that must be taken care of correctly. And that’s where accounting services for restaurants come into the picture. 

Restaurant accounting forms one of the most important elements in maintaining your business financially stable and alive. Below, we are going to provide you with the basics of restaurant accounting, which include defining what it is as well as highlighting reasons why it should be outsourced.

What Is Restaurant Accounting?

Restaurant accounting refers to a division of accounting that deals specifically with financial aspects unique to the hospitality industry. 

Accounting services for restaurants involve keeping records and managing different monetary transactions like daily sales, payroll & inventory etc. 

Its aim is to help restaurateurs have an accurate and clear image regarding their economic performance and, hence, make educated decisions toward growth and profit.

In contrast with other industries, restaurants operate using high levels of transactions, inventory fluctuation, and revenues from multiple sources (eat-in, take away, etc.). This kind of intricacy demands custom-made restaurant accounting services aimed at dealing with these particular obstacles.

What Does it Mean to be a Restaurant Accountant?

A restaurant accountant is a professional finance individual dealing with the finance sector of a restaurant. The roles of these accountants include:

Transaction Recording

  • Daily sales and expenses tracking.
  • Ensure that transactions are recorded accurately so that financial statements portray genuine performance.

Payroll Management

  • Accounting services for small businesses deal with wage calculations, tips, and overtime recording through sophisticated software. 
  • Tax rules and labor standards compliance efforts. 

Stock Control

  • Monitoring stock levels to avoid shortfalls or excesses.
  • Accurate valuation of inventory for financial reporting purposes.

Financial Reporting

  • Making financial statements (income statement, balance sheet, cash flow statement).
  • Bookkeeping for a restaurant examines the financial data to spot trends and determine areas for improvement.

Budgeting and Forecasting

  • Preparing budgets to control expenses while increasing profit margins.
  • Future predictions about the company’s finances are based on historical information and market indicators.

Adherence to law

  • Adhering strictly to federal, state, and local laws. 
  • Restaurant bookkeeping service also involves submitting taxation forms and dealing with tax audits.

Which Accounting Method Do Restaurants Use?

The two typical accounting methods found in restaurants are accrual basis and cash basis accounting methods. 

Cash Basis Accounting

Under this approach, income is recorded when cash is received or expenses are paid out, i.e., when money actually changes hands. 

It is easier and clearer for smaller operations with simple transactions concerning income patterns in their cash flow. 

If you’ve just started your business or represent a small eatery, such as a case manager of a restaurant accounting service, use this method. However, as your business grows, this accounting method might not be efficient. This is where you need cash-based accounting. 

Accrual Basis Accounting

As opposed to cash-based accounting, which reports income at the time money changes hands, revenue recognition under the accrual method happens when it is earned irrespective of payment being made then or not yet made later on. 

This practice aligns revenues with related costs, thereby providing an accurate picture of future years. Accounting services for restaurants suggest this method for growing or medium-sized businesses. 

What Essential Elements Should You Track?

To be effective in accounting for a restaurant, it is important that one keeps track of various financial elements associated with the business. These include:

Sales

For one to understand where a restaurant gets its revenue, it is necessary to keep track of sales. Daily sales from all outlets including dine-in, takeout, and delivery should be recorded. 

Bookkeeping for a restaurant involves tracking each separate sales stream. This helps to find out how each part is performing by itself. 

Sales tracking accurately enables trends analysis, identifying peak hours or days, etc. It helps you make informed decisions about menu pricing and marketing strategies.

Expenses

Restaurant expenses can be classified into daily operating expenses and fixed expenses. 

Food items, labor charges like wages and salaries, and utilities form part of everyday operational costs. 

On the other hand, rent payable for restaurant premises, together with insurance premiums and loan installments, falls under the fixed costs category. 

Meticulous bookkeeping for a restaurant involves maintaining a detailed recording of both types of expenditures to help budget effectively and control total costs.

Inventory

Inventory control is crucial in maintaining food cost percentages while ensuring at all times you have what you need on hand. Keeping good records on inventory purchases and usage will prevent shortages or overstocking from happening. 

Effective inventory management done by professional accounting services for restaurants leads to minimal waste and a reduction in expenditure levels.

Payroll

Payroll remains one major expense for any restaurant. Tracking wages, tips and benefits is important in ensuring that employees are paid right on time. 

This also includes computing overtime hours worked as well as observance of labor laws. Meticulous payroll management done by accounting services for restaurants enhances happy workers within a restaurant while avoiding any legal issues concerning wage disputes.

Cash Flow

Monitoring daily cash flow ensures your restaurant has enough money to meet its operating expenses. All cash inflows and outflows during restaurant bookkeeping service must be monitored, including sales, costs of goods sold, payments made to suppliers, etc. 

Maintaining a stable cash flow ensures smooth running of the restaurant business plus enabling it to handle unexpected expenditures or opportunities.

Why Should You Outsource to Accounting Services For Restaurants?

Here are some reasons why it would be wise to get outsourced accounting services:

Expertise

You’ll get access to experienced accountants who specialize in the restaurant bookkeeping service.

Time Savings

You can free up your time to focus on core business operations and customer service. They reduce the burden of managing complex financial tasks.

Cost Efficiency

Avoiding expenses associated with hiring and training as well as maintaining an internal group of accountants. Accounting services for small business offer scalable solutions. 

Wrapping Up

Restaurant owners must have good bookkeeping skills since this segment forms a crucial part of restaurant success. By understanding the basics, keeping track of key financial metrics, and weighing the outsourcing options available, you will be able to keep your restaurant sound financially. No matter whether you’re just a café or a big eatery, effective accounting practices help you navigate industry complexities and make informed choices that lead to sustainable growth.

 

At Elevar accounting we offer specialized services for restaurants and other hospitality business.