Restaurant accounting: how to manage it easily?

Opening a restaurant might have you thinking of mouth-watering menus and interior design, but what about spreadsheets? 

There’s cash flow tracking and balancing books, too, not to mention tax compliance. All of these restaurant accounting essentials are as important as nailing your signature dish, so put in the time to get to grips with money management.

How can you start organising your accounts? What software can you use to make managing your money easier? What should you look for in an accountant?

If you’re worried about staying on top of your restaurant finances, our team at SumUp are here to help. It’s our mission to make money management easier for small businesses, helping tiny teams and independent entrepreneurs thrive. 

From why organising your finances is so important to finding the right accountant for your restaurant, here’s everything you need to know. 

SumUp helps you manage your accounts! Save time with professional equipment, integrated payment solutions and reliable customer service.

Why keep the accounting of your restaurant 

Financial health and integrity are at the heart of every flourishing business, big or small, and organising your accounts is key to maintaining them. 

By organising your restaurant accounting, you’ll be able to:

• Easily work out your restaurant’s net profit

• Understand your expenses

• Prevent bankruptcy

• Make well-informed decisions for your restaurant

• Accurately predict costs of future projects

• Fill out tax returns in less time

• Remain tax compliant

You’ll also find it easier to work with an accountant. When they ask to see certain documents or expense records for your restaurant, you’ll have them ready to go.

Remember, too, that messy accounts cause expensive mistakes. Not understanding your finances can lead to overspending, unwanted overdrafts and large credit card bills.

You’re also more likely to make errors on your tax returns. In the UK, the government can hand out fines for mistakes on your tax returns, not to mention the time it’ll take to get your accounts in order when they ask you to.

In other words, organising your restaurant’s money isn’t optional - it’s a must. If you’re not yet tracking your finances this is your sign to get started.

How to organise your restaurant's accounting

Getting your restaurant's accounting organised doesn’t have to be difficult. 

With these accounting tips, you’ll be able to easily monitor your income, keep financial records and stay tax-compliant for a business that’s built to thrive.

Let’s take a look.

Separate your business and personal finances

One of the simplest ways to get on top of your restaurant's money is by separating your business and personal finances.

If you don’t separate your money, it will be much harder to detail your income and expenses when you need to. You’ll struggle to:

• Track your cash flow.

• Find proof of paid invoices.

• View your net profit.

• Re-invest your profits into your restaurant.

• Work with an accountant.

• Quickly manage your money.

Instead of dealing with these problems, open a new bank account specifically for your restaurant.

You can use your account to pay for any business costs and track your restaurant’s income for a clear record of your cash flow. You’ll also be better able to prove tax-deductible expenses, saving a lot of time when the financial year end comes around.

Make sure you can track your money

A lot of restaurant accounting comes down to tracking your money.

By having a clear record of your costs and profit, you build a picture of your restaurant’s health. Any accountant can quickly look at your statements to understand more about how you’re doing financially and where you can improve. 

Get to grips with your banking software to track cash flow. It’s a good idea to keep a spreadsheet of expenses, too, that you can refer to easily. Date your transactions and attach digital receipts.

For cash purchases, make a note of how much you’ve spent, on what and the date of the purchase. Keep physical receipts organised by scanning them onto your computer or keeping them in a physical folder. 

Set yourself up for tax compliance

We’ve already mentioned tax expenses, but there are a few other ways you can ensure your restaurant accounting is tax compliant.

As a business, you and your accountant will be responsible for your taxes. That includes keeping your recorders in order as well as having the money to pay your bill.

Be sure to set aside some of your profits specifically for your tax. A good place to start is by saving 30% of your total profit for tax if you’re going to be in the lower tax bracket and 40% if you’re going to be in a higher bracket

Any self-employed individual in the UK can learn more about how much they should be saving using the UK Government’s tool.

It’s crucial you keep a close eye on staff payroll, too. Keep an accurate record of who has been paid, the amount paid and when they received it to ensure you’re compliant. 

Know your dates and deadlines

There are plenty of dates you need to be aware of in restaurant accounting. These include:

• Tax return deadlines.

• Tax payment dates and deadlines.

• When your business needs to pay invoices from third parties.

• When invoices are paid by third parties.

• Billing dates.

Maintain a record of your important dates. You can also make restaurant accounting easier to manage by setting up direct debits for regularly scheduled payments.

How to choose your accountant?

Once your restaurant accounting is in good order, you can bring in an accountant to keep things running smoothly. 

A registered accountant will save you time and (potentially) save your restaurant money, too, by optimising your cash flow and helping with tax-deductible expenses. 

Some tips to find a reputable accountant for your restaurant include:

• Only using a registered chartered accountant.

• Reading reviews from other clients.

• Asking for recommendations from other business owners.

• Meeting with accountants before choosing the right one.

If you’re already using accounting software, it’s a good idea to find an accountant who’s familiar with it, too.

5 criteria to consider when choosing your accountant

There are plenty of accountants out there, so how do you know which one is right for you? The best way to filter out the right fit for your restaurant is to have set criteria you can match them against.

Here are some of the key factors to consider.

1. What services are you looking for?

Accounting services don’t have to cover your entire financial system. If you’re happy tracking your cash flow and recording expenses, for example, you might just need help with your tax compliance and payroll systems.

Think about what you need help with before finding an accountant with the skills you’re looking for.

2. Is location important?

Restaurant accounting can be done virtually, using online chat tools and the cloud to get your finances under control. The perks of remote accountancy include:

• Saving you a commute to the meeting.

• Greater flexibility to talk from anywhere.

• A wider choice of accountants.

• More flexible hours to choose from.

If you’re happy with a remote accountant you don’t have to worry about location when finding the right fit for your restaurant. This is particularly good if you travel frequently or have more than one restaurant.

For business owners who aren’t as comfortable using video calls and texts to talk about their finances, you may still prefer face-to-face meetings with your accountant. 

A local accountant is also the right choice if you have a lot of paper documents. Remote accountants rely on digital documents to carry out their work. 

3. What’s their expertise?

Not every accountant works within a niche.

Even so, you might be happier with an accountant who’s had restaurant clients in the past.

A bit of knowledge about your industry can help your first meetings go smoothly. Your accountant will already know valid deductible expenses for restaurants and might have ideas from previous clients that will help you.

Remember, though, that experience isn’t always a must-have. If you’re open to working with an accountant who’s new to the restaurant industry you’ll have a much wider pool of people to choose from.

4. Individual or accounting firm

You can work with an individual accountant or an accounting firm: which appeals more to you?

An accountant is more likely to provide ongoing financial advice that’s personalised to your restaurant. They might offer fewer services or have access to a more limited range of tools, but you’ll benefit from a dedicated, personal approach. 

An accounting firm can have a more streamlined approach. They may have a wider variety of software at their disposal and can match the right accountant to your restaurant. Be aware, though, that you’ll probably be working with more than one person if you choose a firm, making it less personal.

5. Do they use the right software?

No matter how many boxes an accountant ticks, if they’re not familiar with the accounting software you’re already using then it’s not going to be a smooth partnership. You need an accountant who can come in and get to work straight away, getting the most out of your set-up.