Fixed asset accounting is both laborious and very important.
That’s true for nearly any business, and it’s certainly true for restaurants, too. Fixed assets represent important data points in your business’ financial picture. Failing to understand their value can lead to poor decisions – or even to a lack of tax compliance and resulting fines.
Should you outsource fixed asset accounting for your restaurant business? Let’s unpack the basics of fixed asset accounting and delve into its application in the restaurant industry to find out.
What are Fixed Assets?
I know, I know; this is redundant information to any self-respecting business owner. But to clarify the context of our question (and to account for the slim off-chance that you skipped your Accounting 101 class on the day of this lesson), let’s do a quick review: what are fixed assets?
Here’s the definition: fixed assets are any tangible pieces of property owned by a firm that are used in operations to generate income and will not be consumed or converted into cash within the accounting year.
For a restaurant business, this might include items such as kitchen equipment, POS hardware and software, real estate, or delivery vehicles.
What is Fixed Asset Accounting?
With the basic definition of a fixed asset out of the way, let’s review one more basic term to clarify the context of our question. What is fixed asset accounting?
At its core, fixed asset accounting is somewhat self-explanatory. It means accounting for the value of fixed assets (as we’ve previously defined them). Essentially, that means determining how valuable something is based on its expected lifetime performance. A delivery car, for example, is presumably more valuable when it’s first purchased than it is after 10 years on the job. That decline in value is called depreciation, and fixed asset accounting is a way to pinpoint the process on paper via the balance sheet.
If that sounds simple, it is – in principle. In practice, things get complex rather quickly. That’s because fixed asset accounting is called on to answer questions like:
- How often should depreciation be calculated – monthly, quarterly, or annually?
- How are assets classified (there are various categories that identify types of fixed assets)?
- How does fixed asset data relate to tax credits or other incentives?
- When should assets be expensed (that is, transferred from categorization as assets to categorization as costs)?
- What jurisdiction are assets under, and how does that impact calculating basis?
…and more. Add in the high-volume acquisitions, sales, and transfers of fixed assets for restaurant businesses, and the true complexity of fixed asset accounting begins to emerge.
When Should I Outsource Fixed Asset Accounting for My Restaurant Business?
With a fuller context for fixed asset accounting, it’s time to apply its usefulness to the restaurant industry. So, when should you outsource the process for your restaurant business?
In honesty, the answer is probably, “Right now.” For many restaurant business owners, accounting tasks like fixed asset accounting are only impediments to more strategic focuses. Accordingly, there’s no way a restaurant business owner should be doing fixed asset accounting themselves. The opportunity cost is too large.
And internal accounting solutions generally aren’t ideal. Because of overhead costs, they’re nearly always more expensive, and often the higher costs don’t come with higher-quality service. Based on the inherent efficiency and expertise of outsourced services, 9 times out of 10 an outsourced accounting firm will be able to provide better service than an internal employee could hope to match.
There are simply more resources that are available more efficiently via outsourcing fixed asset accounting.
How Should I Outsource Fixed Asset Accounting for My Restaurant Business?
With that in mind, the next question becomes: “How should I outsource it?”
There are plenty of options to choose from when the time comes to outsource – you can select out of everything from rented bookkeepers to full-service finance and accounting firms.
This is where you’ll be best served taking the needs of your restaurant business into account. If you own a location or two, you probably won’t have a gargantuan amount of fixed asset accounting to do; you may be best served by renting a bookkeeper from a local firm.
However, if you’re growing a franchise restaurant business and are pushing 3 to 5 million dollars in revenue, you’ll want to bring on a finance and accounting firm that’s positioned to scale to your needs. In these situations, a local bookkeeping firm probably won’t have the firepower necessary to manage a high volume of fixed assets.
That’s where firms like ours can help.
Looking for Expertise and Scalability in Fixed Asset Accounting?
Choose Global Shared Services.
As we’ve written before, successful business growth hinges on having the full context of data (and remaining compliant doesn’t hurt, either). The most efficient way to do that is to outsource fixed asset accounting to a team that you can trust – one that will have the capability to scale to your needs.
At Global Shared Services, we offer comprehensive financial and accounting services, including fixed asset accounting. We have deep expertise in the restaurant industry, packaged with powerful capability that’s designed to scale to your needs.
If you’re ready to outsource fixed asset accounting or other financial functions of your growing restaurant business, get in touch with us today.
You should have access to experts.
Founded in 2003, we’ve worked with large corporations and small-to-medium businesses alike. Here’s what we’ve learned: access to expert financial and accounting services is a major factor in a business’ ability to succeed and scale. We believe that it shouldn’t be restricted by location or company size. Our mission is to empower restaurants and technology firms with that access.
With GSS, we meet our franchisor requirements on time and with accuracy. The local CPA could not handle our volume. We are so happy to have made the change. GSS knows our business and our franchisor requirements.Multi-unit fast sandwich Owner