Every business needs to keep track of its financial information—whether it’s profits, expenditures, wages, and other necessary data to maintain financial order. Good accounting tells a true story of your business’s financial state; it helps with understanding where you stand and helps projections for the future. Sovereign CPA works with small businesses across all industries. We help them with accounting services to keep their operation in good standing. Today, we’d like to focus on one industry that took quite the financial pummeling in the past year and is looking at creative ways to adapt and grow at the same time.
The Basics of Accounting Services — Why They Matter
If you own a small business or are thinking about starting one, you have likely looked into some of the requirements of that business and what kinds of records and finances you need to maintain to keep it running. Accounting services, at their most basic, inform you about your state of profits, what your cash flow is, and a current picture of your company’s assets and liabilities. And while there is some overlap with bookkeeping and accounting, the two provide slightly different “big pictures.” Professional accounting services will provide you with a more in-depth analysis of your books and records and mobilize the information as a future strategy.
The Restaurant Industry and Incoming Changes
According to some estimates, the restaurant industry lost about 372,000 jobs in December of 2020. Some of those jobs might have been temporary losses—if restaurants were temporarily shutting down indoor dining due to local order—and many others of those jobs might have been long-term losses by businesses shutting down completely.
By any estimation, the industry has a lot to do before it can recover and bounce back from the losses of 2020. Most of the losses are felt by small chains or local establishments that rely on dine-in for their services.
Since last year, there have been plenty of changes to the way restaurants were forced to operate. Many had to go from dine-in to carry out and curbside pickup. Others had to join in with delivery services such as Uber Eats or implement their own delivery services. Other establishments found themselves installing new infrastructure, changing their layout, and creating new space for social distancing. All of this created a big shift in their day-to-day operations and expenses, leading to a lot of last-minute scrambling.
Many restaurants today understand that the recovery might be slower than they might desire and that will mean making some serious adjustments to their finances, budgeting, and wages.
Whether you have owned your restaurant for two years or 10, you are likely aware that an efficient behind-the-scenes operation plays a critical role in the success of any restaurant. Understanding your finances, profits, losses, and overall financial help will help you avoid common pitfalls.
Accounting Tips for Restaurants and Other Service Industries
#1 Consider hiring an accountant: The complexity of books can eat a lot of time from running your business, finding innovative solutions, and adjusting to the changing markets and consumer demands. Losing sight of keeping your customers happy can cost you more in the long run.
#2 Know what and how to keep track of the business needs. For most restaurants, the common expenses are similar, but each establishment is different based on their clientele, peak hours, type of food they serve, and menu items. Thinking of your expenses in categories can help you organize the information. For example, consider the food inventory cost, food sales, beverage sales, cashier’s summary, sales, and cash receipts, operating expenses, and equipment or other costs. It’s good to know what you tend to spend more on, what are your most important expenses, etc.
#3 Watch expenses like a hawk. It’s easy to let expenses get the best of you, especially as a new business that’s looking to find its audience or customer base. Watching expenses very closely and tracking everything that is purchased or spent on will not only develop good spending habits but it will also keep your business from running into trouble.
How Can an Accountant Help My Restaurant?
An experienced accounting firm can serve your restaurant in different aspects, all of which help your business grow, thrive, and be prepared for unprecedented changes or circumstances.
When you hire an accountant to work with your restaurant business, you’ll receive:
Accounting Services: This one is obvious. And yet, the record-keeping, documentation, tracking, and general accounting are at the core of a sound business plan.
Business Advising: Once an accountant works with your business, they become an expert in your expenses and your restaurant’s inner financial workings. Hiring a restaurant accountant can help bring a fresh perspective that helps you see your finances in a different way and provides some benefit.
Tax advising and help with auditing: When tax season rolls around, you want to be prepared. Regulations of the restaurant industry mean that being in compliance with your tax responsibilities will ensure the IRS never comes knocking at your door. An accountant helps you file your taxes on time and do so accurately and efficiently.
How Do I Find an Accountant that Can Help My Restaurant?
When looking for an accountant for your business, take the time to make sure they are right for you. Don’t be hesitant to ask if they have worked with the restaurant industry before and what they might be able to bring to the table. Prior experience working with the restaurant business or other service industries means they understand the special needs and requirements of this type of accounting.
Keep Your Restaurant in Good Financial Health With Smart Accounting and Consulting
Sovereign CPA has worked with many industries across the state of Alabama. We have worked with restaurant owners and helped their establishments thrive, even against all odds. We know that last year was a difficult year for the restaurant industry—we have all felt it. As things return to normal, we want to help business owners make wise financial decisions for their company and their employees.
Need a restaurant accountant in Alabama? Contact Sovereign CPA today.