Preparing good meals and serving customers is always an exciting part of running a restaurant. When it comes to numbers, however, most restaurant owners do not know what is expected of them. Opening a restaurant may have been your dream, but keeping everything intact is crucial to running a successful business. You need to ensure that the numbers add up, and your revenues cover all the costs incurred. So, where does accounting come in?
Restaurant accounting ensures you have proper financial records and determines the restaurant’s financial health. One of the most important aspects of running a restaurant business, accounting keeps check of your costs, build strategies for more profits, and maintains tax obligations. However, most restaurateurs lack the essential accounting knowledge needed to run a successful business. In this article, we are going to look at some of the most effective restaurant accounting tips:
- Understand Restaurant Accounting Terminology
Understanding accounting terminology and language is key to running an effective restaurant accounting system. The accounting language may seem difficult for people who are not trained in accounting or those who have no interest in matters accounting. However, this does not mean that accounting is too difficult to understand. If you are curious enough and know the worth of accounting for your business, you will dedicate yourself to learning the basic concepts.
Take time to understand terms like labor costs, costs of goods sold (COGS), prime costs, revenue, balance sheet, income statement, and more. The more you learn about these terms, the more you understand your finances. It also means that you will be able to get the meaning behind accounting numbers or financial reports of your business.
- Hire a Professional Specializing in Restaurant Accounting
The role of the accountant in a restaurant cannot be over-emphasized. This is the person who prepares the financial statement, interprets accounting records, and ensures the business is tax compliant. For an effective accounting process, you need to hire the right accountant for your restaurant business. A good accountant will help you in managing finances and producing key financial statements.
Since accounting in the restaurant industry is quite different from other industries, look for someone who has experience or specialization in restaurant accounting. Someone who understands specific restaurant accounting features like a chart of accounts, COGS, prime costs, daily sales, and more.
- Find the Right Restaurant Accounting System/Software
In this modern era, a good restaurant accounting system is a necessity for any business. Even if you have a good accountant for the day to day bookkeeping duties, an accounting system is needed to automate some of the processes and ensure accuracy. Gone are the days when tracking financials used to be a time-consuming and an uphill task. With the emergence of this new technology, you no longer have to worry about creating ledgers or columnar pads for your restaurant.