Toast is a very popular restaurant point of sale (POS) system. If you have Toast you obviously want to know how to extract the relevant data and efficiently get it into your accounting system.
From an accounting perspective I only look for two things from a restaurant POS system:
- Is it a cloud-based system?
- Does it properly integrate with QuickBooks Online?
Notice the word properly in #2. Almost every POS system will claim to integrate with QuickBooks Online. But that doesn't mean the integration is anything that is useful from an accounting perspective. I've seen all sorts of really bad integrations that cause major problems and inefficiencies.
We do a lot of restaurant bookkeeping so we have experience with many different POS systems. Overall I would rank Toast very good from an accounting perspective. Below we will discuss some different aspects and considerations of Toast as it pertains to your accounting system.
Integrate Toast POS with QuickBooks Online
Toast POS does integrate with QuickBooks Online but you have to use a 3rd party app called Shogo. The good news is that Shogo is a fairly affordable add-on at only $30 per month and it works really well.
Toast has a small add-on fee on the POS end to integrate through Shogo, but again it's fairly affordable at around $20. With all that being said Shogo will save you a ton of time and the integration is well worth it.
Once you set up the Toast integration with QuickBooks Online via Shogo you will then have to map the various items to your QuickBooks Online chart of accounts. This is where the accounting piece comes in and you will want a good restaurant accountant to advise you.
There are a few reasons why we really love Shogo.
First, it has worked with every POS system that they have listed on their website.
Second, Shogo enters the daily sales summary automatically based on how you want it broken down.
Third, Shogo holds back the integration if there is a mapping error.
This will often happen when you add a new item to Toast and don't properly map it to the correct income account. Once you fix the mapping issue in Shogo it will post the past entries, you just might need to request it through support. Lastly, they have absolutely amazing and timely customer support.
Tips and Cash Reconciliation
A common difficulty faced by restaurants is handling their cash and tips reconciliation process. We always recommend that restaurant owners push towards running their tips through their payroll process when possible. We recognize that expectations with employees may have already been set and they expect to walk out with their cash tips. In these cases, we use the Shogo integration to track credit tips and cash tips within the accounting system.
In order to reconcile cash and tips on a monthly basis, we'll need to have something to reconcile against. This generally works with a cash reconciliation sheet prepared by the operations staff. At the end of the month, we use this cash reconciliation to ensure that all tips were collected, paid, and reviewed by the accounting team.
Toast Gift Certificates
Toast has there own built-in gift certificates system. We highly recommend using it as it works incredibly well to track outstanding gift certificates, balances, etc.
Customers can easily purchase gift cards and send them to recipients via text or email. Gift cards can be redeemed in person as well as online through the Toast Online ordering system. Lastly, customers are able to look up their gift card balance and add value to it if they choose to do so.
Toast Merchant Processing
I'm fairly certain that Toast forces you to use their merchant processing. Don't quote me on that but I think they recently made that switch.
I'm not sure of the merchant fees but I believe they are fairly competitive. From an accounting perspective, it isn't the most accounting-friendly merchant processor we have dealt with, but far from the worst.
The daily sales integration through Shogo really helps to make sense of the merchant deposits. You may run into merchant batches that just aren't making sense with the bank deposits.
I would recommend running the Settled Deposits Daily Breakdown report in Toast.
We typically have to wait until the 5th or 10th of the month to reconcile the merchant account. One thing you will note is that on the last day of the month that batch will sometimes settle with batches from the following month. It can sometimes be difficult to reconcile the merchant deposits but this report should help.
3rd-Party Delivery Services
The various 3rd party delivery services like Uber Eats, Doordash, Grubhub, etc will make most restaurant owners cringe due to their high fees. Unfortunately, they are typically a major pain to account for properly as well.
Having the various delivery services integrated via Toast will definitely help on the operations end of the business. From the accounting perspective, I can only tell you that they are time-consuming and a pain to reconcile.
It is hard to explain but I could easily show you via the statement from the various platforms.
There are all sorts of issues like the various fees, returns, etc that need to be done properly. Another major consideration is sales taxes. Some platforms will collect and pay your state tax for you so you want to make sure you understand the details so you don't double pay your sales taxes. Most platforms don't collect any local taxes further complicating things.
I tell restaurant owners to avoid 3rd party delivery apps at all costs but also understand that most customers expect you to be on at least a few of the delivery platforms.
Toast Payroll Services
We have had a few clients use Toast Payroll services and of course, there are both pros and cons. One major pro is that the payroll piece is integrated with the Toast POS system (kind of obvious) so hours are automatically synced to Toast payroll from the Toast POS system. Like any other payroll provider Toast Payroll will file your payroll taxes and W-2s for you. As we have preached in the past we believe every business should outsource their payroll.
One really big benefit of Toast payroll that I recently learned about is the Toast Tips Manager. With the Toast tips manager, you can set up tip pool rules to have your tips automatically distributed among your staff according to the tips distribution rules that you set up. For any restaurant manager or owner that has had to deal with managing tip distributions and tip pools, this is a huge benefit. This will save you a ton of time and reduce your liability by ensuring that you are properly distributing all of the tips collected.
Another benefit of Toast payroll is that you can offer your staff a Toast Pay Card so they can get instant access to their tips and wages after each shift.
The big con of Toast Payroll services is that they do not integrate with QuickBooks Online. It is not an incredibly difficult journal entry to make, but still, a payroll journal entry integration with QuickBooks Online would be nice. I have been told by Toast that the payroll integration does exist if you are using the xtraCHEF feature (more to come on xtraCHEF in our next section). What I'm not quite understanding is why Toast won't roll the payroll integration out to all customers. Even if they charge a fee to set up the payroll integration worth it to automate the payroll entry.
You should note that if you allow physical paper checks for employees this will cause a decent amount of data entry as each paycheck needs to be added as a line item on the payroll journal entry.
Cost of Goods Sold
First of all, I could go on and on forever talking about getting to the true cost of goods sold in a restaurant. It is time-consuming, costly, and requires a lot of upkeep.
We typically recommend using a cost of goods sold account when you make your purchases. Of course, when you purchase an item it is inventory and doesn't become a cost of goods sold until you sell them. However, getting that level of detail in your QuickBooks Online system will require a decent amount of work.
One option is to do a physical inventory count and calculate the cost of that inventory. Then you could adjust the cost of goods sold to inventory and give you a more accurate COGS.
xtraCHEF which is owned by Toast will help calculate a more accurate cost of goods sold. With xtraCHEF, you can upload your vendor invoices and they will be coded to your accounting system by line item. Then the invoices will be automatically synced to your accounting system. You will get a daily dashboard of sales and expenses. Lastly, with xtraCHEF Pro, you will get recipe costing, prime cost calculations, and inventory management.
In summary, regarding the cost of goods sold, I do understand why it is a major concern for a restaurant owner. In trying to get to a more accurate cost of goods sold you just need to do a cost-benefit analysis and find a system that works for you.
Summary of Toast from an Accounting Perspective
Honestly, I would give Toast a big thumbs up from an accounting point of view. When a client tells me they are using Toast for their POS system I tell them it was a good choice. Compared to other restaurant POS systems that we do accounting for I would say that Toast is the easiest to automate and account for properly in your accounting system.