Accounting for Restaurant and Hospitality Sector
In this day and age, accounting doesn’t just end in scope wholly in providing you with financial reports in terms of profit and loss and balance sheet. As the competition arises, the scope of accounting is turning into dynamic, with every passing day. It involves quite a lot more than you can just imagine. In today’s business globe, you can’t verify a single business firm in which accounting is not been used. Either it is a profitable business in terms of trading business or services-based small and medium-sized firms.
Apart from the business field, the hospitality sector is also not escaped to get into contact with accounting. The hospitality sector has a wider scope than you can imagine. Restaurants and hotels are considered to be included in it, but they are just a part of hospitality. This category also includes, clubs, casinos, parks, motels, resorts, cafes, any luxury transportation may be via road (railways or buses), sea or air.
he majority of the hospitality sector binds around the restaurants and hotels (including small cafes or large resorts). This sector also requires keeping a proper track record over every business transaction. It is always hard to estimate the profit margin under the food business. These kinds of businesses involve several activities. But their way of carrying on the accounting procedure may be slight differences, as depending on the kind of services they are offering.
You can’t just imagine the number of accounting entries has been put in the back end of the entity, which you have eaten in the restaurant. Just like other businesses, they also record, classify, and summarize their business transactions in the form of journal entries to their business measurable in terms of profit or loss. They also have to prepare the financial reports at the end of every period to get access to the financial position of their business.
The accounting for any hospitality business mainly for any food business (restaurants, small shops, cafes, etc.) includes:
- Preparing and collecting the monthly accounts
- Matching monthly balances (Sales or Bank Accounts)
- Creating financial statements (Cash Flow, Balance Sheet, and Profit & Loss Account)
- Payroll Calculation
- Tax Preparation
- Budget Preparation
- Business Planning
As the sales incurred in restaurant or hotels is not as same as a sale that happens in any retail or wholesale business. Tacitly, their way of recording monetary transactions will also have a slight difference. As some of the common aspects which are to be considered essential while recording into books of accounts are:
Sales: Sales are merely considered as revenue which is earned by varied segments that coated under the hospitality sector when they render their service to their customers. Sometimes their revenue has been incurred but the deposits are been received yet. And those can be considered deferred until the payment is received. Sales recording is simply a straightforward measure in the hospitality industry. As and when any outside service to a customer is incurred in terms of sales it is stated under revenue generated by the business.
For Instance: In the restaurant, the payment is received by the business when the customer pays off the dish he had ordered. And that payment is considered revenue for the same restaurant business.
Cost of Goods Sold: The major cost behind every single sale consists of food, labor, and transportation, which are added until the last step of a food serving is completed. While recording incurred sales, the cost is considered necessary. As the cost is deducted from the sales the remaining figure is taken into account as a profit earned by the specific restaurant or resort.
Payroll: There is a number of individuals working at different designation in any kind of hospitality sector. There may be varied staff working at the back end of food-based businesses or in hotels like dishwashers, chefs, cooks, waiters, serving hosts, guests’ hosts, attenders, housekeepers, and so on. Their wages are to be calculated within the framework of the laid norms by the corporate. It may be on an hourly basis or a daily basis.
It is essential that payroll must have accurate figures recorded; only then the correct amount of paycheck can be issued to all the employees.
Accounting (Restaurant Bookkeeping): Other than the above essential aspects of accounting, there are several transactions, which occur in business on a daily basis. It may include miscellaneous which are incurred by the business and other incomes earned by them. They are also essential to make a proper record for them into the books of accounts. There can be the processing of invoices, recording accounts receivables and accounts payable, recording of depreciation.
Business Process Analysis
It is essential that you measure present day-to-day or week-to-week business performance of your hospitality business. This can provide you with the clear-cut visualization about the instant situation of your business. An analysis is used to calculate the variance, if any, in any of the business processes. Business process analysis is advantageous for deciding the future course of action for the business. As the future is always undetermined and it is beneficial to be well prepared in advance to fight against any uncertainty.
In the nutshell, although the restaurant and hospitality sector experienced stupendous modifications in its operations, still the need for accounting will remain constant to mark up their business standards to the level of customers’ expectations. For the same, the business needs to know the present flow of their business by which they can formulate their future strategies and policies to operate the business and providing the best hospitality service to its customers.
We are very well aware of the amount of hard work you put into your services based business for your customers. It is essential to get out of the accounting and set your free time just for your customers, it is not always possible to get.
Being into a hospitality business, not getting enough time for your customers? Stop worrying about your accounting work. Outsource your basic accounting and bookkeeping services, Payroll and Tax Preparation services to Accounting Outsource Hub. We render accounting services for small businesses like restaurants, cafe or any other food businesses. It also includes in:
- Sales Recording
- Financial Statements Preparation
- Cash Flow Statements
- A/R And A/P Aging Summary
To know more about our Outsourcing services for small businesses like restaurants, never hesitate to CONTACT US at any time.