8 Top Tips for Restaurant Bookkeeping and Accounting

Book Your Free Consultation
  1. Home
  2. »
  3. News about Accounting for Restaurants
  4. »
  5. 8 Top Tips for Restaurant Bookkeeping and Accounting

8 Top Tips for Restaurant Bookkeeping and Accounting


Are you a new restaurant owner looking for advice on proper bookkeeping strategies? Perhaps you have worked in the restaurant industry for years, but you are feeling like you need a refresher course on how to handle your expenses and earning reports. Regardless of what stage you are at in your restaurant career, anyone who has walked in your shoes knows that running a hospitality business is full of challenges.

Running a restaurant is more than just greeting guests, serving great food, and making a name for yourself in the hospitality business. One of the most important, yet challenging things about operating a restaurant business is managing its finances.

Our restaurant accountants have great advice for the secret to successfully managing your financial records. If you are a restaurant owner in need of some bookkeeping advice, here are the top 8 tips compiled by accountants to best handle your finances.

What is Bookkeeping in the Service Industry?

Bookkeeping and accounting in your restaurant are when you monitor your expenses and profits and adjust accordingly based on how much you are earning for your business in relation to how much you are spending.

When planning to open a restaurant you might not have considered the astronomical amount of services, products, and labor you would be spending money on. From rent, vendors, equipment, license and permits, technology, advertising, employee salaries, there is an endless list of things to account for, and we have not even mentioned the food and other products yet.

When working on the accounting for your restaurant, you must keep track of:

  • Where your money is spent
  • How much money you are spending
  • The source of revenue
  • Determining the amount of money to make a profit
  • Reconciling banking statements
  • Filing business taxes
  • Preparing financial statements
  • Creating budgets
  • Keeping up-to-date accounts payable records

The Best Accounting Tips for Restaurant Owners

With so many responsibilities, restaurant owners constantly fear there is something they may overlook or not account for that will affect the success of the restaurant. In fact, running a restaurant is one of the most difficult industries to break into– with financial recording and reporting as one of the main pitfalls that owners experience leading to loss of profit and loss of the business.

Our restaurant bookkeeping professionals have compiled the top 8 tips to help you manage your hospitality business’ financial records.

#1 – Accurate Accounting

It seems like this would be obvious if you are the type of restaurant owner who pays attention to the ins and outs of your business. However, there are many restaurant owners who for one reason or another tend to overlook details that lead to mistakes. Not dedicating the time and energy toward accuracy in your bookkeeping can lead to many struggles down the road.

When considering accuracy, never round up your numbers. Be precise down to the decimal point so that all of your records are absolutely accurate– accuracy is essential for keeping track of revenue, expenses, profit, and tax reporting.

#2 – Learn to Speak the Language

Whenever you work in an industry, but particularly when you own a business, it is important to understand the specific language surrounding the culture of that business type. When it comes to the restaurant industry, as an owner you probably know exactly what the differences are between an appetizer, small plate, amuse bouche, and tapas.

While it is admirable to know the language of the kitchen, your primary role is that of a business owner. This means you also need to understand financial language. Knowing what it means to be in the red versus in the black, what is a profit versus a loss, and what constitutes revenue or an expense.

Understanding the language not only related to the restaurant business, but to business and finance itself is one of the first steps to becoming a responsible restaurant owner.

#3 – Understand Your Expenses

Understanding the types of expenses your business has as well as keeping track of them accurately is paramount to a successful restaurant.

Do you know the difference between fixed cost and prime cost items? Fixed-cost items are things whose price will not change or that you as the owner do not have control over. Whereas, prime cost items are things you can control.

Examples of a restaurant’s fixed costs are:

  • Rent or mortgage
  • Insurance
  • Permits
  • Equipment
  • Operational expenses

Examples of prime costs are:

  • Ingredients
  • Beverages
  • Staffing
  • Taxing
  • Benefits

Knowing what you spend your money on and having the opportunity to adjust those prime costs accordingly will help you determine the overall needs of your restaurant business.

#4 – Track Your Revenue

How much do you earn from your food sales, catering services, and merchandise sales? Restaurant owners who know the inside details of their business’ financial reports usually know those numbers off the top of their heads or at minimum know exactly where to find the accurate revenue– the money generated by the business.

If you do not know your revenue numbers, you may not know why your restaurant is losing money. You will not know where you can cut back on costs so that you can make a profit. Not knowing revenue is one of the main reasons restaurants fail, so as an owner who cares about your business it is important to implement a bookkeeping plan to track the revenue of your restaurant now.

#5 – Create a Profit and Loss Statement

Taking all of your financial dealings within your restaurant business into account, it’s important that you create what is called a profit and loss statement. This tool is used to keep track of all of your expenses, creating an easy visual breakdown of the revenue, costs, or any expenses related to your business.

This document works as an easily accessible bookkeeping strategy to give you a full purview of your restaurant’s financial records.

#6 – Consider Payroll Outsourcing

As we’ve already reviewed, there are many financial responsibilities of restaurant owners. Payroll is one area that many in the hospitality business find to be the most reasonable financial item to outsource to someone other than yourself.

Hiring an experienced payroll professional or organization helps you with issues related to liability as well as saves you fees if errors are made in your employee payments. With so many financial records to attend to on a daily basis, allowing an outside source to be responsible for payroll will help you tremendously while also avoiding employee-related issues.

#7 – Invest in a Restaurant POS System

Not only do you want to ensure that your business is relevant, up-to-date, and modern with the times, but also when considering accounting and bookkeeping, it is a clear benefit to invest in a point-of-sale system that helps organize nearly all aspects of the restaurant, including front and back of the house.

A good point-of-sale system can:

  • Manage inventory
  • Provide an operating worksheet
  • Track revenue
  • Quickly and accurately perform transactions
  • Provide sales reports
  • Manage payroll
  • Provide employee cashier summaries
  • Schedule employees

#8 – Pay Your Taxes

Restaurant sales are subject to local and state sales tax and payroll information is necessary for Medicaid, social security, unemployment, and payroll taxes. Additionally, you must pay federal taxes on your net profits.

Reporting your sales and payroll taxes to the government is required by law, or you can face serious fines, fees, legal consequences, loss of reputation, or other situations that can lead to you losing money or even the business. It is important for restaurant owners to work with restaurant accountants who can help them accurately report to the IRS and avoid the stressful, emotional turmoil associated with getting behind on business taxes.

Contact Our Restaurant Bookkeeping and Payroll Accountant

Are you a restaurant owner looking to get your financial reports and bookkeeping strategies in order?

Matthew Shiebler is a CPA with over 25 years of experience working with professionals in the restaurant service industry– from payroll needs, bookkeeping accountability, and filing business taxes, our knowledgeable accountant can help organize and streamline your business’ financial reports for success.

Call us today at (305) 517-3977 or schedule a free consultation with our restaurant CPA today!