Operating a restaurant is a dream for many, but there’s a lot more to it than meets the eye. There are far more restaurants and food-related businesses that fail than succeed, and that’s frequently because entrepreneurs spend more time focusing on front of house operations and food preparation than on the business and accounting side. Though it is not the flashy side of the business, accounting and bookkeeping is just as important as your menu, décor, and presentation, especially with the typical narrow profit margins seen in the restaurant business. To make your success more likely, take the information provided below to heart. Even better, get professional assistance from our office. Establishing a Smart Restaurant Bookkeeping Process Get help The most important thing to do is hire a bookkeeper if you don’t know what you’re doing when it comes to restaurant bookkeeping – and preferably one who has specific experience in food and beverage accounting. The more your bookkeeper knows about the specifics of cost of goods sold, front-and-back-of-house operations and inventory management, the better. Arm your bookkeeper with the tools that they need This usually means purchasing a special software package that has been written with restaurants in mind. The more particular the package is, the easier it will make everybody’s life. Look for a program that allows you to make customized invoices, generate profit and loss statements, track your revenue, and review cash flow. It is also important that you can generate customized reports to track trends and that the program is cloud-based so that you can access the information on demand. Categorize your cash flow with a chart of accounts An experienced bookkeeper’s first step is likely to be setting up a chart of accounts that will track assets, expenses, liabilities, revenue, and equity, then break those categories down further into the various specific areas that are most important for you to keep track of. Select a Point-of-Sale system that works for your environment Retail operations have been transformed by state-of-the-art point-of-sale systems that tie every aspect of the business together. A robust program will do far more than generate receipts or place orders with the kitchen: it will also help with inventory management and tie into your sales reporting. System selection should be based on more than bells, whistles and capabilities. You also want to make sure that your entire team finds it intuitive and easy to work with. Keeping Your Eyes on The Right Information Food businesses have many different metrics that need to be tracked so you can have a clear picture of what is happening, where things are working well and what needs to be improved. The most important aspects of your business that you need to track include: Inventory – Having an inventory management system will help you understand what is selling and what isn’t, as well as calculate the right pricing for items that are selling well. By tracking ingredients and supplies, you can take advantage of discounts, order using economies of scale, and avoid waste. Sales – Revenue is one of the most important aspects of running any business, and when it comes to restaurants it is essential that you know how much you are bringing in from different areas of your business, whether that is liquor and beverage sales as compared to food, dinner as compared to lunch and breakfast, or from catering as compared to in-house dining. Cash Management – Tracking cash coming in as compared to going out is the key to keeping your business afloat. It needs to be done every day, then repeated on a weekly and monthly basis so that you understand how your sales are trending and how to schedule your bill payments. Accounts Payable – Though paying vendors may be a struggle, especially at the beginning, making sure that you are doing so on a timely basis will ensure that you will continue getting the high-quality supplies that you need, when you need them. The best way to keep track of your liabilities is in your accounting software, which will help you schedule payments in a way that meets your obligations while also maximizing your cash flow. Payroll – One of the most important aspects of any restaurant’s success is the quality of their employees, both in the front of the house and in the back, but keeping track of payroll can be a challenge. Different staff members get paid on different wage structures, and there are complicated tax processes that are involved as well. With an estimated ten percent of the American workforce made up of restaurant employees, there are plenty of tools that have been developed to ensure that those 14.7 million working in the industry are getting paid the way that they should and that you are tracking them, whether they are part-time, full time, hourly, or salaried. Reconciliation – Reconciliation is the process of making sure that you have everything in your business operations and financial management properly accounted for, including your credit card bills, loans, bank accounts, and payroll.