When you’re starting a restaurant, as well as when you’re running one, so much of your time and energy is spent planning and fine-tuning the menu and getting customers through the door. But all this effort counts for nothing if your restaurant business isn’t making money. To make sure you’re maximising the potential of your business – and minimising the time spent on the accounts – we’ve put together this restaurant bookkeeping quick guide.
Restaurant bookkeeping tips
Below are our top 5 restaurant bookkeeping tips:
- Automate as much as possible
- Generate and check daily sales reports
- Reconcile bank accounts every trading day
- Integrate your POS system with your accounting software
- Outsource your payroll.
Restaurant bookkeeping services
We recommend you hire a professional restaurant bookkeeping service to get your financial systems setup and automated as quickly and as much as possible. You can also hire a bookkeeper on an hourly or monthly basis to look after the day-to-day reconciliations and data entry. Due to the complexity of Restaurant Industry Awards, we also highly recommend you outsource your payroll needs.
Some of the areas of your business a professional restaurant bookkeeping service can help with are:
- Cash flow
- BAS preparation and lodgement
- Handling accounts payable
- Tax management and payments
- Financial reporting.
Restaurants employ staff under different awards. Shift work is involved and there are usually 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 worked, superannuation contributions, leave entitlements, and taxation rates takes time that you could be spending elsewhere.
Outsourcing payroll to professionals not only saves you time, it reduces the risk of having to pay fines if an error is discovered or payroll taxes are lodged late. With a large payroll, these fines could be substantial.
Tax deductions and payments
Every year the ATO update their taxation rulings on what restaurants (and other businesses) can claim as eligible business deductions. Your restaurant bookkeeper will have the most up-to-date information and will know what you can claim on depreciating assets and other expenses. Your bookkeeper will also know how to claim GST credits for leased restaurant equipment.
Restaurant accounting services
As the restaurant industry has such tight profit margins it is important to analyse your financial reports regularly, so you have an accurate idea how your business is running. Routinely reconciling your financial records may also help you spot possible employee theft.
Having up-to-date financial records 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 business strategies and goals. When your main focus is the daily running of the restaurant, you may not see any patterns or trends until you take a step back and look at the bigger picture.
A professional accountant will know the benchmarks for your industry, such as the standard rates for profitability and growth, and will be able to provide strategic advice and recommendations. If you need accounting advice or would like us to assist with setting up your restaurant business systems, give us a call on 1300 728 875 or send us a message.
Getting the fundamentals right
Before you open the doors to your fabulous new restaurant, there are some fundamental questions that need to be answered:
- How will customers pay you?
- How will you pay suppliers?
- How will you roster and pay your staff?
- How will you pay for furnishings and décor?
- How will you record all these transactions?
From the outset you’ll need to decide on the best accounting method for your business to record these transactions: cash or accrual accounting.
What is the best accounting method for a restaurant?
Most restaurants use the cash accounting method for their financial reporting. This doesn’t mean they can only receive cash payments or then have to pay suppliers on cash-on-delivery (COD) terms. Cash accounting also allows for other payment methods, such as credit card transactions, and invoices with delayed payment terms.
Cash vs accrual accounting
The difference between cash and accrual accounting has nothing to do with the form of payment. Instead, the two methods allow for businesses to choose when their income and expenses are recognised in their financial statements and by the ATO: at the time of payment, or when an invoice is issued / bill is received. Each method has different tax implications for your business. Read our article for more information on the differences between cash and accrual accounting.
How will customers pay you?
There are two different methods for customers to order and pay at restaurants. At a full-service restaurant, customers are allocated a table, they then choose and order their meal(s), consume the food, and then pay. At counter-service restaurants, customers order and pay at the counter, then sit down and eat or take-away.
In both situations a point-of-sale (POS) system to capture the order quickly and accurately, send the order to the back-of-house kitchen, and receive payment is imperative to the success of a restaurant. Not only does a POS system streamline the process, it also reduces the risk for human error, cuts down on food wastage from incorrect orders, and avoids unhappy customers that had to wait too long to receive their food.
In addition, with the advent of food delivery services such as Uber Eats and Menulog, having a POS system that integrates with their network means you can also service customers who never even step foot in your door.
POS systems can also provide additional financial reporting benefits.
Choosing a POS system
There are many restaurant POS systems available in Australia. So how do you choose the right one for your business?
- Start by reviewing comparison sites and look at the features available. Do you need all of them or just a basic system to start with?
- Consider the fees involved – will you be charged for each order/transaction or a fixed monthly amount?
- Are there different tiers of fees depending on the volume of transactions?
- How easy is the system to use?
- Will it integrate with your food delivery service (if you offer that service)?
- What other integrations are available? Can it connect seamlessly with your accounting software?
We recommend the trifecta of integrating Lightspeed POS (formerly Kounta), Deputy rostering, and Xero accounting software. Read our article on Xero bookkeeping for restaurants for more information.
If you’d like to discuss your restaurant bookkeeping, accounting, or payroll management needs, get in touch on 1300 728 875 or send us a message for an obligation-free consultation.