Many restaurants can’t justify the expense of bringing on a dedicated, full-time chief financial officer. While servers and staff handle inputting customer orders into the POS system, the responsibility for managing transactions in the restaurant’s accounting software typically falls on the general manager or the owner. However, maintaining accurate financial reporting often requires specialized accounting and tax expertise that exceeds the capabilities of in-house personnel. This is where partnering with a CPA who specializes in outsourced restaurant accounting can be an invaluable extension of your team.
For starters, you might outsource certain bookkeeping tasks to an external accountant on a weekly basis or every period-end — and even on a more frequent basis if you lose your GM who was covering this work. A CPA can help establish daily or weekly flash reports that are generated by your POS system and accounting software to help you track key metrics, such as gross profit, food cost as a percentage of sales, or any of the vital labor metrics that are so important to running a restaurant. Outsourcing these tasks assures that transactions — such as payroll, tips, inventory counts, and supply purchases— are properly recorded. Staying atop bookkeeping through the year helps simplify year-end financial reporting and tax filing.
Which Financial Reports Does Your Restaurant Need?
Some food service businesses create cash-basis or tax-basis financial statements. However, if your restaurant has outside investors or bank loans — or you’re trying to obtain external financing — you may need to prepare accrual-basis financial statements that conform with more complex accounting standards.
A complete set of financials should include the following three reports:
- A balance sheet, which shows assets, liabilities, and owners’ equity
- An income statement, which lists revenue, expenses, and profit
- A statement of cash flows, which breaks down cash receipts and disbursement into various categories including cash flow from operations, financing, or investing activities
Some restaurants rely heavily on daily or weekly flash reports to manage daily operations, and they wait until year end to issue a complete set of financial statements. Others prepare financial statements every period or every quarter to help optimize financial results. What’s appropriate for your restaurant depends on your preferences and the expectations of investors, as well as the requirements of any lending or franchise agreements.
Are You Using the Right Accounting Software?
Restaurants can choose from a broad menu of accounting software programs with various bells and whistles. For ease of use, accounting software should tie into your POS system and other management systems. It should also be secure to prevent cyberattacks, which could lead to stolen employee records or customer credit card data.
In addition, many restaurant owners prefer cloud-based accounting systems. This can help you monitor restaurant operations from home — or while you’re out of town.
After you’ve selected accounting software, you should periodically reevaluate whether it’s still appropriate for your current size and operations. It may be time to upgrade to a newer, more robust accounting solution.
Beyond Tax & Accounting: Find a Restaurant Specialist
Even with the best tools and systems, accounting for restaurants can be complex. When selecting an outside accountant, it’s important to find a professional who understands the challenges and opportunities that lie ahead for your restaurant.
A great CPA should serve as an advisor who can help interpret financial results and enhance profits margins. You can use them as sounding boards for making well-informed financial decisions. Connect with the restaurant experts at CSH and learn more about the value-added services that we can provide for your restaurant.
