You just opened a brand-new restaurant in the heart of downtown. Let’s just say Dallas, to give your restaurant a location we can work with. Now what do you do? In addition to getting people in the door and making sure your kitchen is staffed with the best talent you can find, you also have to deal with accounting. Restaurant accounting is something that begins on day one.
It is common knowledge that restaurant margins are very thin. As such, new restaurant owners are frequently reluctant to hire an accountant right away. Gurian CPA, a Dallas CPA firm, strongly recommends you bite the bullet and get hooked up with an accountant right from the start. If that’s not possible, then put the time and effort into educating yourself about what’s required.
A Whole New Language
You may be familiar with things like pesto, flavor palettes, and the proper way to pair food and wine, but how much do you know about the language of accounting? Suffice it to say that accounting has its own terms and definitions people outside of the accounting space don’t know.
You are going to have to learn the language. You’re going to have to learn about profit and loss statements, operating in the red (or black as the case may be), revenue vs. profit, margins, prime costs, and a lot more. You will never truly understand whether your accounting is adequate if you don’t know the terms.
Look to Technology
Handling restaurant accounting with a paper ledger is still possible, but it is terribly complicated. Moreover, it’s completely unnecessary. There are plenty of software packages and mobile apps designed entirely around restaurant accounting. A specialized application built for the restaurant industry makes it easier than ever to track all your financials.
Familiarize Yourself with Tax Law
Learning the terms and buying a software package is just the start. Now you need to familiarize yourself with tax law. Why? For starters, you are probably collecting sales tax on every meal you serve. But that’s not all. You’re going to have income taxes to worry about. Then there is the federal and state withholding for each of your employees. And don’t forget the tips your servers and bartenders collect.
Taxes can be a real stress inducer for restaurant owners. For this reason alone, most who don’t hire an accountant from day one eventually do so anyway. There is just a lot to keep up with when it comes to taxes.
Find a POS System
The point-of-sale (POS) system you utilize will play a crucial role in how easy accounting is for your restaurant. Gurian recommends not skimping. This is one area in which a solid financial investment can really pay off. Remember that your POS system keeps track of your sales revenues. It can also keep track of tips, how customer bills are paid, what kinds of meals are being sold, and even how much alcohol is being purchased.
As any good accountant will tell you, a strong POS system that integrates with a restaurant’s accounting software is priceless. You might want to look into a system that combines both POS and accounting in a single package.
Hire an Accountant
If all of this seems overwhelming to you, take a deep breath and relax. It’s not the end of the world. But now would be a good time to step back and reconsider your decision to go it alone. Hiring an accountant may cost you a bit more upfront, but it will save you a lot in the long run. At least think about it.