What bookkeeping do restaurants need?
Restaurants need more hands-on bookkeeping than most small businesses because of the transaction volume, cash handling, and thin margins. Missing something in a consulting firm might cost you a few percentage points. Missing something in a restaurant can mean the difference between profit and loss.
Daily sales reconciliation is foundational. Your POS system generates sales data that needs to match what actually hit the bank. Credit card deposits, cash drawers, and third-party delivery platforms all need to be accounted for separately. When DoorDash or Uber Eats takes their cut before depositing, your books need to reflect the gross sale, the platform fee, and the net deposit. Otherwise your revenue looks lower than it actually is.
Tip tracking is both a bookkeeping task and a compliance requirement. Tips need to be reported accurately for each employee, and you need to calculate tip credits correctly if you’re paying tipped minimum wage. The IRS pays attention to tip reporting, and getting it wrong creates problems for both you and your staff.
Food cost tracking separates restaurants and bars that make money from those that don’t. You need to know what you’re spending on ingredients as a percentage of food sales. Most restaurants target food cost between 28-35% depending on concept. Without accurate invoice entry and regular inventory counts, you’re guessing. And guessing at food cost in a thin-margin business is a fast way to lose money.
Labor is your other major cost category. Restaurant payroll is complicated by varying schedules, overtime rules, tip credits, and high turnover. Getting payroll wrong means frustrated employees and potential labor law violations. It also means you can’t accurately calculate your labor cost percentage, which should typically run 25-35% of sales.
Prime cost is food plus labor combined, and most restaurants need it under 65% to be profitable. If your bookkeeping doesn’t give you an accurate prime cost number every week, you’re flying blind. A bookkeeper for small business owners in food service will make sure you see this number regularly and can spot when it’s creeping up before it becomes a crisis.
Sales tax adds another layer. Massachusetts requires monthly or quarterly filings depending on volume, and restaurant sales tax applies to most food and beverage sales. Tracking taxable versus non-taxable items and filing accurately prevents penalties and interest.
The bookkeeping needs to integrate with how restaurants actually operate. Daily reconciliation, weekly labor tracking, monthly food cost calculations, and regular review of your key metrics. When the books are structured to show what matters, you can make decisions based on real numbers instead of hoping the bank balance looks okay at the end of the month.
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More Questions
What are the signs I need to hire a bookkeeper?
The clearest sign is not knowing whether you're actually profitable. Other red flags include books that are months behind, stressful tax seasons, and making financial decisions based on your bank balance rather than real numbers.
Read answerWhat's the difference between profit and cash flow?
Profit is revenue minus expenses according to accounting rules. Cash flow is money actually moving through your bank account. They diverge because of timing differences in collecting revenue, paying bills, and debt or equipment purchases that affect cash but not profit.
Read answerShould I outsource payroll or do it myself?
It depends on how many employees you have, how complex your pay structure is, and how much your time is worth. Most small business owners underestimate the compliance burden of DIY payroll until they get hit with a penalty.
Read answerHow do I track food costs for my restaurant?
Food cost tracking requires consistent purchase categorization, regular inventory counts, and a formula that compares what you spent to what you sold. Most restaurants struggle not with the math but with keeping the inputs accurate week after week.
Read answerHow much does a bookkeeper cost for a small business?
Small business bookkeeping typically costs $200 to $600 per month for basic services. Actual pricing depends on transaction volume, how many accounts need reconciling, and whether your industry requires specialized accounting like job costing.
Read answerWhat payroll records do I need to keep?
Keep employee tax forms, timesheets, pay stubs, and quarterly tax filings for at least four years. Some records like I-9s have different rules. Organized records protect you during audits and make tax season straightforward.
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