Common Mistakes of Restaurant Accounting

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Let’s say you have a great homemade pizza recipe and you want to open a restaurant. You’re a great cook, but you have no business experience. What could possibly go wrong?

Restaurants are known to be one of the most difficult businesses to start. According to a study conducted by The Ohio State University, over half of all new restaurants close or change ownership in the first three years. Most of these failures can be attributed to the owner’s lack of business knowledge and expertise.

One business area restaurateurs particularly struggle with is accounting. Independent Cincinnati bookkeepers can help.

Doing your own bookkeeping isn’t always cost-effective

Your first instinct as a restaurant owner may be to take on the accounting yourself, perhaps to save money. But, without a business and financial background, you might make mistakes that could cause the failure of your restaurant.

Here are some of the most common restaurant accounting mistakes owners make:

1. Bookkeeping errors: Manually entering row after row of data is time consuming. There’s also a good chance that while inserting data, you will make an error. It only takes one movement to enter that $200 invoice as a $20 invoice.
2. Not reconciling bank and credit cards balances every month: As a restaurant owner, you’re busy with customer service and making sure your menu items are perfect. But if you don’t take the time to make sure your accounts balance each month, it will be harder to recognize changes in your Cost of Sales, trends in revenue, or the company’s cash flow.
3. Getting behind on vendor invoices: Once invoices start to pile up, they need to be taken care of right away, or your reporting will become outdated and vendor payments will go out late. In the worst case, your vendors may stop delivering.
4. Not using a four-week accounting period: A monthly accounting period makes sense for many businesses, but not for restaurants. Restaurants make their profits on specific days of the week (like weekends) and months have different numbers of days, so looking at monthly financials will not help you see true trends.

Correct, up-to-date financials are critical to restaurant success

These are just some of the errors that can occur doing your own restaurant accounting, especially if you don’t have a financial background. As the owner, you need correct, up- to-date financial reports–so you can make informed decisions and avoid financial issues such as tax audits later.

A professional bookkeeping service like BookWerks^TM can take the mundane but so-important task of daily financial record keeping off your plate. With the bookkeeping handled, you can spend your time on revenue-producing tasks like perfecting your pizza recipe and interacting with your customers!

We specialize in restaurant bookkeeping at BookWerks^TM and will gladly share how we can help your business grow during a free, no-obligation consultation.