Many restaurant owners fall into the trap of trying to do everything themselves, including bookkeeping and payroll. But what if I told you, while you might be saving hundreds of dollars each month not paying for those services, that you’re probably losing thousands of dollars each month in operating expenses? Let’s talk about how to manage restaurant accounting so it best serves you and your restaurant.
Many restaurant owners handle their restaurant accounting because they want to save money. For example, payroll companies can range from $250 to $500 each pay period. When you’re paying weekly, semi-monthly, or bi-monthly, it could seem like considerable savings to do it yourself. But are you keeping up with all the payroll regulations? Are you using QuickBooks or some other software program and hoping they’re going to sweep your taxes for you, that they’re going to make sure everybody got paid, that rate changes didn’t happen, that there’s not a data entry error? Are they going to keep track of when somebody hit their FICA/SUI limit so you can stop taking that from the paycheck? Are you going to do all that on your own, or is that a job better suited to a payroll company?
Another reason restaurant owners want to manage their restaurant accounting is to review their numbers faster. A lot of restaurant owners are working with bad bookkeepers or bad accountants, and they don’t see their numbers for 30 days, 60 days, 90 days, or longer. I’ve seen situations where the only time a restaurant owner gets their numbers is at tax time when it’s too late to do anything about them. Once you’ve had one or two bad bookkeepers or experiences, even if with a good accountant that just didn’t treat you the way you needed to be right at the beginning, it can make you a little hesitant to trust you’ll receive better results with someone different. You think if you want something done right, you might as well do it yourself.
But if you don’t have an accounting degree, you’re probably messing your books up. And even if you do have an accounting degree – because I do have members who are accountants who go into the restaurant business ¬– you’re wasting your time. Yes, you know how to do all this stuff, but you’re not spending your time in your restaurant wisely.
So, what should you be doing to manage restaurant accounting? Here are my recommendations.
• Make sure you hire a bookkeeper, an accountant, a combination of both, or an office that has it all.
You want professionals who are going to gather all the information on a weekly basis or daily basis, make sure your bills are paid and that your books are tied out. Make sure they’re advising you and helping you make appropriate changes and that you have the right chart of accounts. Your books are a report card that you can look at to understand your business and use to make good decisions to move your business forward.
• Hire a payroll company.
They’ll track the SUI limits and such along with the laws that go along with it, and they’re only going to pull money from your account for taxes. This way you keep control over your money in your account or a payroll account, and some payroll company isn’t using your money to make more money. But the biggest reason to hire a payroll company is they take on the liability that if they file improper taxes for you, or they didn’t take the right amount, or they filed wrong, the IRS screwed up, whatever it may be, they’ll get in between to ensure they fix it. That removes liability from you if they make a mistake with your payroll. When it comes to taxes, that’s huge all by itself.
• Meet with your CPA on a quarterly basis.
Yes, you can use a bookkeeper or an accountant to do your books on a daily, weekly, or monthly basis, but on a quarterly basis, you should have a professional review your books. A CPA should be advising you to look at your numbers, see what your quarterly taxes should be and what decisions you might make to reduce your tax liability to make life easier for you. A good CPA should more than pay for themselves. It doesn’t matter if they’re charging you $2,000, $3,000 or $10,000, they should be exceeding that when it comes to your taxes and looking at your business on a quarterly basis. They’re an adviser.
When you do move these duties to the professionals, you and your business benefit.
1. You will have time to work on budgets. As a restaurant owner, you have to create your plan for success, what you’re going to do now. The beautiful part about great accounting is you can put your budget next to your accounting for each month and find out where you hit or missed and decide what new systems to put in place to get back on track or to change your reality. You cannot do this if you don’t have good books in a timely manner.
When you budget, and you get those updated numbers, it’s a simple entry, and you can proactively manage your business. When you hire someone else to do your restaurant accounting, it allows you to think strategically for your business.
2. You buy yourself time to develop, manage and hold your managers accountable. Your job is to lead the team. Make sure they know what you want done, how you want it done, how well you want it done and by when. You also need to manage all those new priorities and tasks, from manager meetings to a list of tasks you want them to get done to projects. You just don’t give work to your employees and it gets done. You have to take an active role and then ultimately hold them accountable. They decide to do their job or not, and they’re answerable for the resulting consequences.
3. You can also have peace of mind that things are getting done. You know your numbers are getting done. You know, your managers are getting things done. You’re leading your team.
By giving up accounting, bookkeeping and payroll, you buy back time to focus on your business. It may cost you hundreds of dollars each month, but by leading your team and becoming the leader your restaurant needs, you’re saving hundreds of thousands of dollars a year because you’re executing your plan, ensuring you make changes when necessary to make sure you make the money you deserve and have managers in place to run the business. So instead of doing the work, outsource the task and then use those numbers to lead your business forward.