How to Keep Accounting Records for a Small Restaurant
Timely, accurate accounting records are just as important for a small restaurant as they are for large restaurant counterparts. Owners and office managers should both know and understand procedures for keeping accounting records to effectively manage cash, control costs and maximize profits. A daily, weekly and monthly schedule can ensure accounting personnel stay current with keeping records and spot inconsistencies or errors before they go too far.
Use a combination of cash register reports and an industry-specific computerized accounting system or a spreadsheet to record end-of-shift and end-of-day sales revenues. Record sales according to food item categories such as appetizer, main course or beverage. Record sales tax as a separate item and indicate whether the payment method is cash or a debit or credit card. Sales revenue tracking is important not only for making accurate sales tax payments but also for analyzing trends and making sales comparisons.
Keep and file sales receipts, invoices, regular monthly bills and expenses for things such as payroll, rent and utilities and miscellaneous purchase receipts. Track every expense the restaurant incurs and every payment the restaurant makes in order to accurately assess your profitability. If you can afford it, a computerized double-entry booking system will help facilitate the accounting process and ensure a greater degree of accuracy. At the end of every accounting period, calculate total expenses for each accounting category. Add category totals together to calculate overall expenses. Determine the restaurant's net profit or loss by subtract total expenses from total sales revenues for the same accounting period.
Keep detailed payroll records to ensure the restaurant submits accurate withholding and employment tax amounts. With the exception of a restaurant manager, most employees are paid hourly and earn a portion of their wages in tips. Require employees to report tips on time cards or a separate tip reporting form, because they are responsible for paying income tax on tip amounts. Make sure you use current Internal Revenue Service and state tax tables to calculate federal and, if required, state income taxes. Calculate and deduct Social Security and Medicare withholding using the current year percentage.
Every business has a legal obligation to periodically report and pay sales and payroll taxes. Most states have a sales tax requirement for retail businesses such as restaurants, and you have a standing yearly obligation to pay federal income tax on restaurant profits. Payroll tax payments also include state unemployment insurance taxes in addition to amounts withheld for employee federal and state payroll taxes as well as the employer's share of Social Security and Medicare taxes.