Restaurants are a specialised business and this section of the hospitality industry presents a number of unique challenges for keeping financial records. When you are working from morning until night it doesn’t leave a lot of time for recording entries and working out payroll and GST. Having a bookkeeper can take a lot of pressure off and ensure that all of your records are both accurate and up-to-date.
Some of the areas a bookkeeper can help you with are:
• Cash flow
• Handling accounts payable
• Financial reporting
Accurate Financial Records
Keeping track of income and expenses is especially hard in restaurants due to the nature of the business. The restaurant industry has such tight profit margins it is important to analyse your financial reports on a regular basis so you have an accurate idea how your business is running.
Food costs are one of the most important elements you need to measure and stay on top of. Food lies at the heart of any restaurant business and it has a rapid turnover and high volumes. Not only that, food costs are always fluctuating depending on season and production. For example, prices can suddenly soar if producers have been affected by drought or floods. This means restaurant costs are volatile and must be constantly monitored.
Keeping track of invoices and payments to suppliers in itself is a constant job. A busy restaurant is usually buying stock on a daily basis and it may only take a very short time for paperwork to get out of hand and pile up. Most restauranteurs work long hours and it can be difficult to maintain up-to-date financial records. When your inventory is regularly evaluated, you can make informed decisions as to whether you alter menu prices or even the menu itself. Balancing the books lies at the core of a bookkeeper’s work. If you want, a bookkeeper can even pay invoices so you know your stock is always in supply. Having a bookkeeper leaves you free to concentrate on the running of your business.
A bookkeeper can also take the pressure off you by ensuring all the invoices and receipts are logged accurately. If you are hurriedly punching numbers between managing your day-to-day tasks it is also very easy to make mistakes. When your books are not accurate you may be losing money without realising it and if you do spot discrepancies in your bank accounts you may not be able to account for them. Also, when mistakes need to be corrected by an accountant, it is both time consuming and very costly.
Having up-to-date financial records also allows for any cost leaks or negative trends to be identified quickly so you can take immediate action if necessary. Some trends are more long term and once identified it allows you to adjust your long-term strategies and goals. When your main focus is the daily running of the restaurant, you may not see any patterns or trends at all. Routinely reconciling your financial records may also help you to spot possible employee theft.
Accurate bookkeeping not only makes managing cash flow easier, it also makes lodging BAS statements easy and stress free. When you have all of your receipts at hand you are maximising what you can claim back. Missing receipts equates to losing out on deductions you could have claimed on. Your bookkeeper can also lodge BAS for you.
One more thing to consider, accurate financial records also makes your business attractive to investors and buyers. Buyers will be confident that your profits and wages are true. This puts you in a strong negotiating position. On the other hand, if your books are disorganised, important documents are missing, and your tax returns are not coded correctly, it makes it hard for a buyer to have any faith that the figures are correct.
Restaurants employ staff under different awards. Shift work is involved and there are probably people employed on a mixture of casual, part-time, and permanent basis. Restaurants also typically have a high turnover of staff. Trying to keep track of pay rates, hours, superannuation, leave entitlements and taxation takes time that you probably do not have.
Payroll is an area that is truly best left to the professionals. If your payroll taxes are incorrectly filed or you file them late, you are liable and the penalties and interest can be quite high.
PAYG & Taxation
Restaurant furnishings and equipment are expensive and have a high use. They are subject to rapid wear and tear. Every year the ATO update their taxation rulings on what you can claim. Your bookkeeper will have the most up-to-date information and will know what you can claim on depreciating assets. Your bookkeeper will also know how to claim GST credits for leased restaurant equipment.
Having accurate books is crucial for the BAS reports and taxation. If the books don’t balance the ATO will take notice. And if the ATO does decide to audit your business, wouldn’t it be nice to have the confidence and peace of mind knowing that everything is already as it should be?
If you are in the restaurant business, you know that profit margins are tight and long hours must be spent ensuring everything is running well. You also know that it is imperative that you know what is happening financially because, after all, it is a business. Let a bookkeeper do the job that they know best so you can get on with the job that you know best.