Restaurant bookkeeping is often over complicated for one reason or another. I think the day to day demands of running a restaurant can cause an owner to neglect the bookkeeping process. Once you are behind on the bookkeeping it is difficult to get caught up. The profit margins in the restaurant industry are too tight to let your bookkeeping slip. If you aren't watching your financials closely it may be too late to fix problems by the time you catch them. Here is a simple 5 step guide on handling your restaurant bookkeeping.
One of the first items you will have to figure out is how to properly record your sales. With restaurant sales it is necessary to record a daily sales journal entry into QuickBooks. We record a separate daily sales entry for each day (not monthly or weekly) because we're attempting to mimic how the cash and credit card deposits hit the restaurant's bank. Most restaurants accept credit cards and settle the batch on a daily basis. This will result in a credit card deposit or deposits hitting your bank account separately for each batch. You need to analyze how funds are hitting your bank and set up your bookkeeping system to mirror that activity.
In order to record the daily sales you will need to generate some sort of report that summarizes your sales. Most restaurant POS systems will have a daily sales summary built into them. If you need to customize the report to get more detailed information you will need to work through the customization with your POS system. Once you have a sales summary you should set up a daily sales journal entry and create a memorized transaction in QuickBooks.
Handling Accounts Payable
The next step of your restaurant bookkeeping process should be to set up accounts payable. Keeping your vendors happy will be important if you want them to continue to do business with you. You need to learn how to enter bills and pay bills in QuickBooks; both are easy tasks to accomplish. Entering your bills 1-2 times per week and paying them once per week should be more than sufficient. If you are cutting checks for your bills you want to make sure to print checks from QuickBooks. This will automatically feed the payment information into your QuickBooks file, thus reducing unnecessary data entry. Another option is to pay your bills with online bill payment by linking your bank account to QuickBooks and signing up for online bill pay.
Another part of your accounts payable will be setting up a credit card in QuickBooks. I have seen many users set up credit cards incorrectly in QuickBooks. A credit card should not be set up as an expense type account; it should be set up as a credit card type. Your expenses are recognized as you enter credit card charges. Setting up a credit card with the correct type will also allow you to reconcile the account, which is very important.
I always recommend that clients use an outsourced payroll service, no matter what industry they are in. One major reason is the liability that comes with running your own payroll. If you incorrectly file your payroll taxes or file them late, the penalties and interest you will be assessed can be quite large. Secondly, outsourcing your payroll needs is very affordable. I would look for a payroll company that is very reputable. I would also require that payroll data have the capabilities to be imported into QuickBooks and all reports and paychecks to be sent digitally.
Reconciling QuickBooks accounts is the single most important piece of the entire bookkeeping process. Reconciling your accounts is the only way to know that you have recorded all of your financial transactions. You need to reconcile all of your accounts not just your bank accounts. You should reconcile bank accounts, credit cards, loans, lines of credit and payroll liabilities. Any account that gets a statement with a beginning and ending balance can be reconciled. Account reconciliation ensures that you are looking at accurate financial reports.
Financial reporting for your restaurant should be another crucial part of your bookkeeping process. If you are not using financial reporting for your restaurant you are running your business blind. With such tight profit margins in the restaurant industry it is important to analyze your financial reports on a regular basis. Restaurants should be looking at sales vs. cost of goods sold ratios as well as labor ratios. Another ratio many restaurants should consider is the prime cost, which aims to keep cost of food + beverage + labor at roughly 60% to 65% of your total sales. Looking at profit and loss comparisons to previous periods and years will also give you some insight as to how things are going financially. Restaurant financial reporting can be the difference between success and failure.
There are many other aspects that go into your restaurant bookkeeping like restaurant POS selection, inventory controls, controlling theft and handling cash. However, the 5 simple steps above will put down the foundation for a solid bookkeeping system. As you grow you will have to continually modify your bookkeeping system to meet your needs.
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