What are restaurant accounting services?
Restaurant accounting is a set of services that help a restaurant business manage its finances, sales, and cost of doing business. These services are beneficial to any type of business, especially one that is involved in selling a product or service to a client.
Tips to Help You Decide Which Restaurant Accounting Services to Use
What are Restaurant Accounting Services?
Running a successful restaurant is not all about serving delicious food. Without having a strong grasp of your finances, you would not be able to move forward.
The owner of a restaurant business, therefore, needs detailed information on the quantum and sources of revenue and expenditures, and an in-depth understanding of their assets and liabilities in order to plan better. For instance, the restaurateur would need data on food sales, projected sales, cost of goods sold (COGS), sales from online and offline channels, labor costs, food costs, prime cost (a combination of labor cost and COGS), costs on advertisements and loyalty programs, and so on. Business owners are ill-advised to make decisions on the basis of mere instinct.
However, number-crunching may not be every restaurateur's cup of tea. Indeed, having an accountancy degree is not one of the eligibilities to open a restaurant and even though you may do the accounting yourself, it may result in an untidy patch-up job. What you need, therefore, is professional help.
Accounting service providers like certified public accountants, in this regard, act as a guiding force for restaurants by keeping track of expenses on food, human resources, stocks, asset repair and maintenance, and business expansion. They match them against revenues earned, thereby helping restaurant owners prepare effective strategies.
Apart from keeping a tab on accounts payable (money that the company owes) and accounts receivable (money that is owed to the company), accounting services also deal with bookkeeping services, which document the costs and earnings of an organization. Accounting service specialists also help organizations with payroll processing, provide crucial advice on ways to reduce the tax burden and improve tax compliance, help audit financial records, undertake forensic accounting for locating missing funds, and ensure that an organization's documented transactions match those on the bank statements.
The strength of accounting service professionals lies in the specialized technical knowledge they bring to the table, on the basis of which better budgets and balance sheets can be prepared, the organization's financial health can be safeguarded, and fraud and mismanagement can be prevented.
Why do Restaurants Need Accounting Services?
As discussed in the preceding section, accounting services are vital aids that allow businesses to keep their financial records organized, and make prudent decisions. Accountants help business owners break down data, and find ways to minimize costs, enhance revenue and increase profits. Accountants have the required training and perspective which guide business owners in taking major decisions confidently and without error. Without a proper perspective on tax liabilities, cash flow, and market conditions, for instance, a decision that you think is right may actually turn out to be a blunder.
An accounting service provider ensures a high degree of efficiency and accuracy in financial reporting, data analysis, and bookkeeping. Bookkeeping services, in this regard, are essentially specialized data entry services providing monthly financial reports, and also offer payroll processing, tax preparation, and cheque-writing services.
Accounting services help in tracking sales, profit, and loss, preparing sales reports, comparing past and present sales figures, identifying trends, forecasting future sales and demand, and undertaking risk assessment. They also allow restaurants to reconcile the sales figures generated by the point of sale (POS) system with those entered in the books. Moreover, by ensuring that the organization's bank account is reconciled with books of account, accounting services shield companies from inadvertent (and costly) financial mismatch and fraud.
Accounting service providers also help with tax accounting, which requires highly specialized training.
In addition, accounting services make restaurant payroll management, which is another inherently complicated task, hassle-free. Preparing payroll at a restaurant is difficult as a result of multiple payment types, multiple staff roles, and irregular work hours. Also, minimum wages for tipped workers, tip reporting requirements, and tip credit reporting needs are unique aspects of the restaurant industry. Therefore, you are better off availing the services of a professional who is well-versed in these matters, who would ensure due and on-time payment for everybody, and one who is compliant with payroll laws.
Accountants ensure that the organization complies with all relevant laws so that it does not end up losing money in fines and litigation costs. Auditing will reveal if the company has exercised due diligence with its finances, and whether it has incurred unnecessary expenses in overtime or excess inventory.
A small business may make do with the services of in-house bookkeepers for routine accounting tasks in order to save money, but even then, it's advisable to take the help of CPAs for auditing records. Preparation and thorough reading of a restaurant chart of accounts will offer a clear understanding of revenue, assets, debts, liabilities, capital, and cash flow. Meticulous financial accounting is particularly necessary as the profit margins of restaurants are usually razor-thin, ranging between 3-9%, according to the USA Today network. Accounting service providers use accounting software to ensure the best results.
You want to make sure you’re getting the best accounting services for your restaurant, but you don’t know how to select one.
This article will help you out.
What is Restaurant Accounting Software?
Accounting software helps with quick, easy, and accurate reporting and processing of data. Automated accounting is a significant advancement over manual accounting, which is invariably tedious, slow, and susceptible to human mistakes.
Accounting solutions let purchase orders, invoices, sales reports, sales projections, and payroll data be produced faster and with a higher degree of accuracy than pen and paper methods. Automated software ensures that the financial transactions of a restaurant, such as accounts payable, accounts receivable, fixed asset management, profit and loss, revenue management, and cost management are accounted for smoothly and without error. It also enables robust financial reporting and data analytics.
With the help of restaurant accounting software, financial data covering different periods can be generated in real time. That way, a clear view is provided of the financial health of the organization and financial statements are generated.
Restaurant accounting software acts as an invisible force cutting across multiple elements of restaurant operations, such as workforce management, inventory management, time and task management, customer relationship management, business intelligence, and food safety management, and can also integrate with the POS system. This makes restaurant management an efficient and holistic process.
Essential Features of Restaurant Accounting Software
Accounting solutions allow restaurants to closely monitor their finances and ensure that they stay competitive and are able to rake in profits on a consistent basis by minimizing costs and maximizing sales. One of the defining features of accounting software is the automation it provides. It does away with the possibility of human error and ensures that the accounting is highly accurate and consistent.
Earnings and expenditures of restaurants can be computed and recorded efficiently with the help of accounting software. Expense tracking is automated, giving business owners full knowledge of labor costs, food costs, taxes, and maintenance and repair costs, and in turn ensuring that the cash flow doesn't dry up.
Built-in cash management features of accounting software help businesses reconcile their cash transactions with their bank statements. This displays exact cash situations and prevents any discrepancy in funds.
Accounting plays a big role in facilitating inventory and supply chain management. It helps in avoiding wastage of resources as a result of overpurchasing of stocks and suggests the precise quantities that are to be purchased to prevent stock-outs. When seen in conjunction with sales figures supplied by the POS system, and data supplied by demand/ Sales Forecasting solutions, accounting software tells business owners which ingredients to buy more or buy less of. It also lets businesses conduct Inventory Adjustments by reconciling the recorded inventory with the actual inventory to take into account changes in inventory counts due to damage, wastage, theft, loss of value, free samples, and mistakes in calculating the number of items received. Accounting also identifies variance in food usage.
On the one hand, obstacles to revenue growth can be removed, and on the other, cost escalations can be avoided as a result of auditing and accounting. Accordingly, apart from buying the right amount of stocks, measures taken to reduce costs include scheduling the exact number of employees, doing away with unnecessary overtime, choosing vendors that offer the biggest cost advantage, discontinuing menu items that don't have many takers, prioritizing popular products, and calibrating strategies for advertising and customer relationship management. Sales reports can also be generated for restaurant branches and franchise stores.
Accounting software offers automated reporting and analysis of data, integrates with and influences all aspects of restaurant management, and helps in managing assets like restaurant real estate, POS hardware, refrigerators, furniture, air-conditioners, and so on.
Automated tax calculations and tax filing, built-in security and audit control, and data visualization are some of the other key features of restaurant accounting solutions.
How to Pick the Right Accounting Software for Your Restaurant?
Pick a restaurant accounting solution that is cloud-based and supports monitoring of financial data on the go, and one that can be accessed from anywhere, anytime, and on any mobile gadget.
Accounting solutions must also be able to automate various aspects of business operations. This feature offers considerable advantages to businesses, enabling them to reduce their dependence on human accountants and let machines handle the number-crunching. Unlike humans, machines are not likely to get bored or fatigued under the weight of data and can keep churning out accurate and actionable insights without fail. Moreover, automated workflows ensure that business operations are faster and that restaurant employees don't have to manually enter data into the system. This helps restaurant employees save effort and time. Errors can be minimized too.
Restaurant accounting software must support both, accounts receivable and payable as it's necessary for business owners to have a clear view of both parts of cash flow. The accounting solution should also provide a simple chart of accounts, which would give you an overview of the company's liabilities, assets, COGS, and revenues.
It's also important for the accounting software you choose to integrate with the various restaurant management hardware and software you use, integrate with bank accounts, and be your trusted tax advisor.
The cost of a software solution is also a key factor to consider for a startup or small business.
The process of finding the right restaurant accounting services can be a bit daunting.
The list below is a great place to start your search for the perfect restaurant accounting service.
Top 3 Restaurant Accounting Software Solutions
1. Zip Reporting-
This software from the Hubworks stable compiles extremely complex data, including data on company finances, and consolidates them in one place. Zip Reporting offers attractive data visualization, presenting data in an easy-to-comprehend manner, and supports powerful Data Analytics . Accordingly, business intelligence reports allow the identification of food usage variance at different branches or franchise stores of a restaurant, as well as variance in employee scheduling. With these insights, businesses can cut their operating costs dramatically. Zip Reporting allows data to be generated for several locations, all of which can be accessed from a single point. This software is cloud-based, which means that it can be viewed on any handheld device in real time and from any place.
2. QuickBooks Online-
This software lets sales receipts and customized invoices be generated with minimum fuss. It supports automatic updates to transactions and financial statements, thanks to its banking integration feature. It lets business owners access the financial accounts of the organization and manage operations at any time even when they are not at the business site. Customizable dashboards and reports enable real time monitoring of the financial status of organizations. The software allows payments to be scheduled, saving time in the process. It also comes with a time-tracking facility that allows employee time and billable hours to be clocked. You can also track the billable hours of workers and clients and add them to invoices.
3. Sage Intacct-
This cloud finance solution streamlines complex processes for billing by automating them. It supports efficient cash management by offering businesses the ability to monitor numerous accounts with visibility in real time. It automates and hastens quote-to-cash cycles, which essentially point to sales cycles, right from sharing a quote to sealing a deal. Powerful reporting offered by Sage Intacct produces quick insights, and data can be analyzed on demand. It offers strong predictive analytics functions, with users able to select from more than 200 data visualization options, and also customize the visualization of data.
Restaurant Accounting FAQs
Q. What is a chart of accounts?
A. This refers to a comprehensive list of accounts that organizations use for internal accounting. A chart of accounts provides a description of each account, identifies account types, and summarizes account balances. With the help of a chart of accounts, business owners can collect information on the state of each account, while monitoring the organization's financial health.
Q. Is cloud storage of financial data safe?
A. Yes, cloud storage of financial information is totally safe. Organizations, however, should ensure that the software service provider is credible, and the software that you intend to use hasn't suffered any security issues. Opt for solutions that use data encryption.
Q. Which accounting period is ideal?
A. The day of the week often has an impact on a restaurant's business volume. For example, a restaurant might experience heavier foot traffic, and generate higher profits, on Friday nights than on a slow Tuesday. Therefore, according to the food cost management solution Orderly, instead of monthly accounting, restaurants may use a four-week accounting period, which considers four weeks at a time, with every week starting on Monday and ending on Sunday. This benefit is not offered by monthly accounting as, for instance, the number of Fridays in the same month may be different from one year to another.
Q. Do you need to specially train your restaurant staff to use accounting software?
A. There is no need for special training because accounting solutions these days are pretty easy to use and understand. One can use these solutions to monitor income and expenses, generate invoices, and print reports without hassle.
The process of accounting can be a difficult and time-consuming task. You don’t want to hire the wrong service, or worse, have to change your service every few months.
The right accounting service solution will be able to offer you the best advice for your business. This article tells you how to find one.