Small business owners have a lot on their plates. This goes double for restaurant owners who don many hats while juggling a variety of responsibilities and challenges. You have to get a handle on the financials and keep up, or it’ll be difficult to get it under control again.
Some restaurant owners or managers do the books themselves, while others hire an accountant. Either way, it’s important to stay abreast of the current financial situation to wisely strategize growth and to have a general idea of how to keep accounting records.
Here is a basic breakdown of how to keep accounting records for a small restaurant.
There are four general categories that must be analyzed:
- Sales: Records of sales are kept for every shift and every day. Cash registers often allow you to run reports detailing sales and sales tax for each product type. Track sales revenue with a spreadsheet or QuickBooks, comparing across categories, days, and weeks, and separately list sales tax.
- Expenses: While you track every dollar you make, you also must track every dollar you spend. That’s how you determine profitability:
- Record receipts, bills, invoices, utilities, rent, and payroll
- Calculate total expenses after every accounting period
- Add category totals to get the overall expenses
- Calculate the net profit or loss by subtracting the total expenses from the total revenue
It’s recommended that you enter bills a few times a week and then pay them weekly.
- Staff Payroll: Proper tax handling requires detailed payroll records. Federal and state withholdings can be subtracted from each paycheck. Have employees report tips on a tip reporting form, and the employees will pay income tax on that amount total. To calculate payroll amounts, multiply the employee’s hours by the hourly wage. But it is safer to use a payroll service to make sure everything is done correctly and on time.
- Taxes: Many jurisdictions, state and federal, tax retail businesses such as restaurants. Medicare taxes, industrial insurance, Social Security, and unemployment insurance taxes must also be paid.
To ensure you’ve recorded all the transactions, you must reconcile all your accounts, including credit cards, bank accounts, and payroll. This key for accurate financial reports. Regularly review your financial reports. Labor ratios, sales vs. cost of goods sold ratio, and prime cost (food and labors costs as a percentage of total sales) are important ratios to consider.
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Source: TABC Blog by Learn 2 Serve