Restaurant bookkeeping is a lot like keeping a well-organized wallet. Both involve keeping track of cash, cards, and coins—where they are, how much you have, and if something’s missing.
After all, it is the extensive process of tracking and recording all the financial activities of your franchise and it can produce quality results when you dedicate time to it.
Unfortunately, restaurant bookkeeping is much more complicated than organizing your wallet, and doing it incorrectly could mean losing a lot more than just a debit card or a $10 bill.
There are many ways to do restaurant bookkeeping, but we believe in the importance of finding what works for you.
That’s why we’ve written this article. We want to help you gain a full understanding of bookkeeping and how you can leverage it for yourself in the right way.
We’ll start with the basic definition of bookkeeping. Next, we’ll hit the highlights of what restaurant bookkeeping means in general, then look at how it applies to the restaurant industry. Finally, we’ll touch on some of the difference between bookkeeping and accounting and why restaurant bookkeeping singles itself out from other industries.
What is bookkeeping?
In its simplest form, bookkeeping is “the process of recording financial transactions”. This can be done by hand on paper, or, more commonly now, with accounting software.
A bookkeeper is typically the individual who performs this function. Business News Daily describes a bookkeeper’s job this way. “[They work] to maintain complete records of all money that has come into and gone out of the business.”
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Important to note: Remember learning that a square is always a rectangle, but a rectangle is not always a square? Similarly, while accountants can be bookkeepers, most bookkeepers are not qualified to be accountants.
Bookkeeping is no easy feat, but accountants have much more rigorous education and certification qualifications. Stay tuned for more on their differences!
The purpose of restaurant bookkeeping
Moving on to focus more specifically on restaurant bookkeeping.
There are many things to think about when you own a restaurant. From the food, to the décor, to the staff – each element or individual has its own goal and purpose.
But what about your finances? Have you laid out goals for this area of your business? (Besides profit, of course.)
The basic purpose of bookkeeping is to help your goals along with this primary function.
To provide an accurate record of all financial transactions that have taken place within the business. This includes sales, purchases, payments, and receipts.
Bookkeeping is typically a daily process and usually involves creating and maintaining a general ledger that serves as the home to all your financial records.
The advantages of bookkeeping can include increased visibility, better cost management, and improved decision-making for the business.
We realize there are more reasons and advantages to keeping faithful bookkeeping practices in place, but these are the fundamentals.
The activities involved in restaurant bookkeeping
There are a number of different activities that are involved in restaurant bookkeeping, including:
1. Recording sales – tracking all revenue generated from both food and drink sales, as well as any other income sources such as gift vouchers and merchandise sales.
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2. Recording purchases – organizing and tracking all expenses incurred on food, drink, and other supplies.
3. Paying bills – ensuring that all supplier invoices are paid on time.
Tasks like managing payroll, filing taxes, chasing down debts can also be part of regular bookkeeping activities.
There is a lot to bookkeeping, but don’t be discouraged! It is a process that can be learned and mastered with time and practice. And remember, you can always outsource this function to a professional if it feels like too much to handle on your own. (We understand- bookkeeping is a specialty of ours.)
The difference between bookkeeping and accounting
We won’t do a deep dive on the differences here because we’ve already written on it.
These two financial functions are like apples and oranges—different, but both are quality fruits and essential to restaurant operations.
To summarize a point made in the article linked above, “the whole idea and purpose of bookkeeping is to accurately track the money a business receives and the money a business spends.”
So, bookkeeping provides the foundation of all accounting functions. Accounting builds off that information to create and plan actionable strategies.
There you have it. Bookkeeping needs to be locked in before accounting can be done with any accuracy.
What makes restaurant bookkeeping unique?
We’ve defined bookkeeping at a general level, but what makes bookkeeping for restaurant franchises different from general bookkeeping?
The main distinction is the four-week bookkeeping/accounting period in restaurants. Most other industries use a month-long cycle, which means transactions are categorized, reported on, and analyzed monthly. This makes producing annual reports a breeze since there are 12 months to study.
However, restaurants have transactional trends that are closely linked to the days of the week, such as Friday and Saturday generally being the busiest restaurant days. This makes the month-by-month analysis less useful as a month with more weekends will always appear better than a month with fewer weekends, making data a bit more difficult to interpret.
There are a few more factors to consider; restaurant franchises generally have a larger staff and are organized differently to allow for many locations, among other things. All told, restaurant bookkeeping is quite unique– even though it shares some aspects with restaurant accounting.
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Need help with your restaurant bookkeeping?
As you process the information you’ve read so far, we hope you’re reflecting on your restaurant’s own financial functions.
Are you satisfied with your bookkeeping practices and software? Would you like to leverage even more expertise and insight?
If you’re ready to take the first step towards more financial organization and security, get in touch with us.
At Global Shared Services, we offer restaurant accounting AND bookkeeping services to business owners like you.
We’ve done this for major brands in all 50 states, and we’ve helped independent restaurant businesses to grow with financial guidance they can trust.
Let’s take your restaurant business to the next level, starting with a free consultation.
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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