From the surface running a restaurant seems like an easy task, you cook great food and serve it, and the business keeps going. However, it is much more complex than that! There is a pool of responsibilities that a restauranteur needs to look after, and restaurant accounting is one such essential task.
Restaurant accounting is one of the most crucial aspects of making your business successful but is often overlooked or avoided. Tracking and making sense of all those numbers is what people often find to be the most tedious.
With the recent introduction of five percent VAT in UAE, it has become equally important for all small restaurants and cafes to maintain a proper book of accounts and records of transactions which they avoided earlier.
Restaurant accounting doesn’t have to be feared if done right. You can avoid doing it but your restaurant cannot sustain without proper accounting.
Here is a list of restaurant accounting tips you can use to manage your finances well.
Control Your Finances With These Restaurant Accounting Hacks
The thought of maintaining your own accounting books can seem a little overwhelming at first. Even if you don’t have a knack for numbers, restaurant accounting concept is moderately simple.
Some of the crucial reasons why bookkeeping is vital are:
- Knowing where you are spending your money
- Keeping a track of the capital you are spending
- Understanding where the revenue is coming from
If you commit to being organized and careful, you can easily manage your finances using these tips.
1. Know The Accounting Language
In order to start managing your restaurant accounts, you need to get familiarized with the accounting language first.
These terms might sound gibberish to you at first but it is essential to understand what these accounting terms stand for.
Get yourself familiarized with terms like revenue, profit-and-loss, prime cost, etc. These terms and others are vital for bookkeeping and will help you manage your finances effortlessly.
2. Be Accurate With Restaurant Accounting
The only way to know whether you are making profits or not is by accurately mentioning each detail.
Keep a detailed account of all the money coming in and going out. This might seem like an obvious thing to do, but several times a small thing like not mentioning the price of a packet of napkins might create a blunder.
You must make it a habit to record precise amounts for every expense and revenues. Not making an account of even a single penny can create a problem in the long run.
3. Track Your Expenses
There are mainly two expense a restaurant has to bear, fixed cost and prime cost.
Fixed costs are the charges that remain constant and don’t change over a period of time. For example, the restaurant’s rent, insurance, etc. The fixed cost typically makes up the minority of your restaurant expense, it’s the variable or the prime cost you need to pay more attention to.
Prime cost refers to the majority of your restaurant’s expenses. They are never fixed and keep fluctuating. Prime cost includes food ingredients, beverages, staff’s salary, etc.
You should keep a close check on your prime costs to track any reoccurring accounting issues and find areas to cut costs and raise profits.
4. Create A Profit And Loss Statement
A profit and loss statement will help you with restaurant accounting and will keep all the information organized in one place. You can customize the document to suit your business requirement. Ensure that your profit and loss statement is well organized and easy to read.
This document will help is very effective in tracking your revenue, food cost, and operating expenses.
It should include the following details:
- Breakdown of the revenue
- Cost of goods sold
- Operating expenditures (restaurant rent, insurance cost, etc.)
- Miscellaneous expenses (daily necessities)
You should provide a detailed breakdown of all the charges in this document for easy understanding.
Although it is advised to create a profit and loss statement for each day, you can start by creating one on a weekly basis.
5. Hire An Accountant
If you feel juggling with numbers is not your cup of tea, then it is best to hire an accountant. Restaurant accounting is not an easy task and requires a lot of precision, after all, it is all about the restaurant’s finances.
If you are not confident with the bookkeeping consider hiring an accountant initially. Gradually once you get the hold of the accounting jargons you can let go of the accountant and manage the restaurant finances yourself.
There are several independent accountants and accounting firms that specialize in restaurant account. You can consider hiring them to help you manage your wealth.
6. Invest In A Good Point Of Sale Software
People often overlook the importance of a POS system for restaurant accounting process. A good POS system will make the work a lot easier for you or the accountant. Look for a POS that gives you detailed sales, inventory, etc. reports. This will come handy when accounting for the money paid and earned.
If you have the detailed data available with your readily, more than half of your work can be done effortlessly. You can easily check the POS history and see the number of bills generated for a particular time frame.
Also, you can check your inventory levels and the amount you are spending on procuring the raw materials and the sales you are making from it.
Restaurant accounting if done accurately and regularly can help your restaurant business flourish in the tough F&B industry of UAE.
It does not matter if you yourself are doing it or seeking help from an accountant. In order to run your restaurant profitably make it a habit to check your finances regularly. Therefore staying on top of your spending costs, inventory, and revenue is key to running your restaurant successfully.
With these restaurant accounting tips, you can start managing your wealth and have a better understanding of your restaurant’s finances.