If your staff seem content in their work, and clients are regularly queueing up to eat at your restaurant, you could be forgiven for thinking that your business must be thriving. However, if you’re still not turning a profit, the opposite may in fact be true, and your restaurant might be struggling financially.
One way of determining the true financial health of any business is to conduct a thorough review of its books, ably guided by accountants in Miami, and avoiding making the kind of mistakes listed below, that can cost a business like a restaurant, dearly:
Not reporting all fringe benefits
From employee discounts and stock options, to achievement travel; all fringe benefits must be reported to the IRS as they’re subject to both federal income and employment tax withholding. Fail to do this, and you could be hit with big penalties.
Having an unreliable accounting system
Managing payroll properly at your restaurant requires a knowledgeable person at the helm, such as an accountant. Whether you opt for QuickBooks and do your accounts yourself, or hire a professional, having a sound accounting system in place will help raise red flags when necessary, ensure that you’re always following industry standards, and give you a better handle on your financials overall.
Not reconciling bank and credit card balances regularly
For busy restauranteurs, reconciling bank and credit card balances on a monthly basis may slip between the cracks, but it can easily leave you high and dry when you fail to spot discrepancies. Missing money, unpaid expenses, and your restaurants’ spending and income can all be identified and monitored on a monthly basis to prevent any unpleasant surprises, and to keep your business on track financially.
A lack of control over inventory
If you don’t have a firm handle on your restaurants’ inventory, you won’t know what (if anything) is missing. You won’t be able to spot and prevent food wastage, reduce spending where possible, or identify food theft. Ideally, inventory tracking should be carried out on a weekly or fortnightly basis, and before every restocking period, without fail.
Not viewing your financials on an accrual basis
As a restaurant owner, viewing your financial data on a cash basis, and not on an accrual basis, means that both revenue and expenses aren’t properly considered, something that’s important for accurate accounting. Cash accounting means that expenses and earnings are recorded when payments are made, and not when services are rendered. An accounting firm in Coral Gables can talk you through the advantages of accrual based accounting, but in its simplest terms, expenses may not be reflected accurately for each month when a cash basis is used, making it hard to determine whether your business has made a profit or a loss over a certain period.
The restaurant industry has always been a highly competitive one, but just because you have positive customer reviews, a happy workforce, and full tables every night in your restaurant, doesn’t necessarily mean that all is well from a financial perspective. By working with an accountant who has the relevant industry experience, and working hard to avoid the mistakes outlined above, you can help your restaurant be every bit as successful as it deserves to be.