5 common mistakes restaurant owners make with bookkeeping
January 11, 2022at4:00 PM
Many restaurateurs would rather avoid any topics around bookkeeping for restaurants. However, it is a critical aspect of managing a business. You cannot run your restaurant properly without going into the bookkeeping details. More importantly, you need to know what mistakes to avoid so you don’t end up with distorted financial information, or worse, incur liabilities.
With that in mind, here are five common mistakes restaurant owners make with their bookkeeping.
1. Mixing personal and business finances
In the early stages of the business, it’s not uncommon to fund your venture from your personal account. Some business owners also use their personal accounts to receive business funds. A related mistake is using your personal credit card to cover business expenses.
In both instances, this can result in a bookkeeping nightmare as it becomes difficult to separate business finances from personal. Also, if you hire someone to do bookkeeping for you, then it means you will have to give them access to transaction details from your personal account, which is not ideal.
2. Not knowing the difference between cash flow and profit
Not knowing the difference between these terms will cause serious issues with your bookkeeping. If you’re recording one as the other in your books, you're going to have a big problem on your hands, especially when doing financial forecasting or calculating your taxable income.
Cash flow is the money that is flowing in and out of your business from its operations, investments, and other transactional activities. Profit, on the other hand, is what’s left after your business expenses have been deducted from your total sales revenue over a given period.
3. Committing bookkeeping errors
It’s common to commit a few bookkeeping errors every now and then, especially if you’re doing the entries manually. In most cases, you might be able to detect these errors in the trial balance. However, there are some errors that a trial balance might not reveal.
For instance, if you commit an error of commission — recording a correct debit or credit entry but in the wrong ledger or to the wrong customer — it might be hard to spot in the trial balance. Plus you need to know how to draw up the trial balance and other related books in the first place.
4. Not integrating your POS system with your accounting software
Even before the COVID pandemic hit the global scene. Point of Sale (POS) systems were already a common feature in restaurants. Now, it’s like the standard mode of payment as many customers have opted for cashless, touch-free transactions. This has made these systems a key source of relevant financial data for your accounts receivables.
That’s why it’s important to integrate your POS system with your accounting software. This way, there’s less chance of errors, and you save time by not having to transfer all that data from one system to the other manually.
5. Trying to handle everything by yourself
This is perhaps the biggest mistake restaurant owners make with their bookkeeping. Trying to do your own bookkeeping while also staying on top of operations is just not a productive way of running a business. Plus, you didn't get into the food business to be crunching numbers and poring over dreary accounts.
The solution to this issue and every other mistake on this list is to outsource your restaurant’s bookkeeping and accounting to the pros.
For restaurants, bars, and hotels in the NYC metro area, this means partnering with Vilardi & Company. With over 20 years of industry experience, we are the accounting and bookkeeping firm to call if you want things done right from the start.
Our team can also help with tax filings, payroll, systems development, forecasting, and more. We are essentially your Chief Financial Officer (CFO) working with you to ensure that your business finances are in order, so you can focus on what you do best — serving up scrumptious dishes and drinks to your customers.
Get started today with a quick consultation
Give us a call at 917.848.0006 or send us a message through our contact form to talk about how we can streamline your restaurant’s bookkeeping and other related systems. You can also reach us via email at email@example.com.