Restaurant accounting services handle many of the same financials as other industries, but they also have unique needs. Operating restaurants means that business owners have to deal with everything from payroll taxes and food safety inspections to serving food and drinks responsibly. Restaurant accounting services can help you with all these things and more to keep your business running smoothly and profitably.
Here’s how restaurant accounting services differ from other industries and why you might want to consider using them in addition to or instead of doing your bookkeeping.
Restaurant Accounting: How It’s Different
Restaurants have their own special accounting needs. Businesses that sell foods and drinks are required to pay a lot of attention to how much money they take in and how much they spend. Restaurants must pay close attention to expenses because many people judge them based on their charges for meals.
If you’re planning to open a restaurant, it’s important to understand how restaurant accounting services differs from other industries. Here are some major differences between restaurant accounting and traditional business accounts.
Accounting methods: Restaurants use a different accounting method than other industries, called cash-basis accounting. This method tracks money as it moves in and out of business rather than tracking assets and liabilities over time. This means that businesses that sell food and drinks don’t have to track inventory or account for depreciation, two common accounting practices used by many other industries.
Costing Methods: Restaurant accounting uses multiple costing methods, while other industries typically use only one. Many restaurants use a combination of cost-plus pricing and menu pricing to determine how much they charge for meals. Cost-plus pricing is used to cover expenses and profit, while menu pricing is used to set prices based on what customers are willing to pay for certain items on a menu.
Accrual method: Businesses that sell food and drinks use an accrual accounting method. They record income when it’s earned and expenses when incurred—not necessarily when money changes hands. This is another difference between restaurant accounting and other industries, which typically use a cash-basis accounting system that records income only after it’s received and expenses only after paid.
Chart of accounts: Restaurant accounting uses a chart of accounts different from other industries. This chart includes special codes for sales, purchases, payroll, and inventory, all unique items to restaurants. If you want to open a restaurant, it’s important to familiarise yourself with these codes and understand how they affect your business’s financial statements.
Reporting methods: Restaurant accounting also has its reporting methods, which are different from those used by other industries. Restaurants don’t have to issue a balance sheet or an income statement because they don’t keep track of assets and liabilities over time. Instead, restaurants focus on their cash flow each day and produce a profit-and-loss statement (also known as an income statement) that shows how much money they made or lost.
Making the Most Out of Your Accounting Services
As a small business owner, you probably don’t have much time on your hands. But accounting services should not be overlooked. They play an important role in your financial success, so do everything you can to get what you need out of them and maximise their utility. Here are some simple ways to improve your relationship with accounting service providers and make sure they help drive your business forward.
- Know your needs: Before seeking accounting services, you must know what kind of assistance you need. This will help you find qualified professionals who will be able to meet your specific requirements and optimise their efforts accordingly.
- Choose wisely: While there are many accounting services out there, not all of them will be able to meet your needs. If you’re not careful, you might end up with a professional who cannot provide you with what you need or charges too much for their services. The best way to avoid these issues is by doing extensive research and choosing professionals carefully before hiring them.
- Be clear about your expectations: Before you start working with an accounting service, you must be very clear about what you expect from them and how they should provide their services. This will help you make sure that your needs are met and avoid misunderstandings.
- Use professional bookkeeping services: With so many accounting service providers out there, it can be hard to choose one that will provide you with everything you need at a price you can afford. That’s why it is always a good idea to hire professional bookkeeping services instead of going for individual professionals who might not be able to meet your requirements as well as they should.
- Keep an eye on costs: While accounting services can be very useful for small business owners, it is important not to let their costs get out of control. Keeping an eye on costs will help you avoid paying too much for something that might not be worth as much as its price tag suggests.
Food cost is one of the most important numbers in restaurant accounting, as it indicates how well you are managing your inventory. Restaurant accounting differs from other industries because of such food and labour costs. Restaurant accounting does not rely on receipts for information but rather uses a point-of-sale system to track products sold and profits earned.