Living the dream of owning your own group of restaurants is a fantastic feeling, but it’s also a very stressful one. Managing a single establishment is often too complicated for many people, let alone an entire group.
If you want to have any chance at succeeding, then you’ll need to maintain diligent bookkeeping to ensure each location remains profitable. That’s why the experts here at Vilardi & Company Bookkeeping and Accounting want to help you by sharing these three restaurant accounting mistakes you should avoid.
Restaurant accounting techniques we don’t recommend.
Fudging the numbers.
If you ever run into a cash flow issue, it can be tempting to resort to incorrect processes to save money, such as paying the staff under the table or including profits from one restaurant in another’s bookkeeping. However, you should never use these types of techniques, because they’ll only end up hurting your business in the long run. You need to have accurate books to avoid running into problems with investors, buyers, and the IRS.
Similarly, you shouldn’t run personal expenses through your business accounts. These two types of expenses should always be kept separate, because when you start to combine them, it becomes challenging to create a realistic snapshot of your group’s finances.
Operating on a monthly restaurant accounting period.
Many restaurant owners assume that looking at their finances through a monthly lens is the best way to measure profits and losses. However, our team doesn’t recommend taking this approach. Instead, we’ve found that it’s more beneficial to use a 4-week restaurant accounting period that begins on a Monday and ends on a Sunday. This makes it easier to accurately compare profits and losses from period to period.
If you were to use the monthly accounting period to compare this July to July of last year, you wouldn’t get a true picture of the finances. That’s because last year in July, there weren’t the same number of Fridays and Saturdays as this year, and that will affect how profitable that month was. If you want a true apples-to-apples comparison between time periods, the 4-week accounting period is your best option.
Using the wrong software to track profits and expenses.
Hopefully, you’re not using physical pen and paper to manage your bookkeeping anymore, but even if you are tracking everything using a software program, it doesn’t mean that’s the best solution. Restaurant bookkeeping is much different from other industries, which is why there are now specific programs available for owners.
Instead of using a general accounting software along with a separate system to track inventory, you can get a program that serves all your needs, including inventory, purchasing, order management, and accounts payable. Not only does this drastically simplify your bookkeeping processes, but it provides convenient and accurate visibility into your group’s overall expenses and income.
Do you know the number one mistake restaurant owners make with their bookkeeping?
It’s trying to handle everything by themselves. Managing your bookkeeping can be overwhelming when you’re overseeing a group of restaurants, and even the slightest oversight can throw all of your records off. That’s why we recommend partnering with our restaurant accounting experts here at Vilardi & Company Bookkeeping and Accounting.
We’ve been helping local restaurants throughout the NY metro area for more than two decades, so we have the experience and knowledge needed to ensure all of your records are accurate. If you want to learn more about how we can help your restaurant group, read about the services we offer, or you can send us a message online to schedule your initial consultation.