Restaurant bookkeeping has more moving parts than most small businesses. Sales come in every day through cards, cash and delivery apps. Food costs change weekly, tips pass through the books to employees, and sales tax is due on almost every ticket. Margins are thin, so small recording errors can hide whether the restaurant is making money at all.
I've kept books for restaurants for years, and the habits below are what keep a restaurant's books clean.
Reconcile sales every day
Your point-of-sale system reports what you sold. Your bank shows what you received. The two never match exactly, so the daily job is to tie them together:
- Pull the daily sales report from your POS, broken out by food, beverage, sales tax and tips.
- Match card sales to the card processor's deposits, which arrive a day or two later with fees taken out.
- Count cash and match it to the cash sales on the POS report, then record the bank deposit.
- Record any difference as over or short, so you can see a pattern if it keeps happening.
Recording deposits as sales is a common mistake in restaurant books. Deposits are net of card fees and include sales tax and tips, so treating them as sales overstates revenue and hides real costs.
Record delivery app sales at their full amount
Delivery apps pay you after taking their commission and fees. Record the full sale amount as income and the commission as an expense, rather than recording only the payout. That way you can see what delivery actually costs you as a percentage of those sales and compare it with dine-in.
Handle tips correctly
Card tips are collected by the restaurant but belong to employees. Record them as a liability when collected and clear the liability when they're paid out, whether in cash at the end of the shift or through payroll. They are not restaurant income. Employees also have to report their tips, so the amounts need to flow through payroll correctly.
Keep sales tax separate
Food and drinks served in a restaurant are generally taxable in Texas. Sales tax collected is money you owe the Comptroller, so it should go to a sales tax payable account, never into sales. Restaurants that serve alcohol also have mixed beverage taxes and reports to keep up with. For the filing itself, see how to file and pay Texas sales tax online.
Track food cost and labor cost
These two numbers decide whether a restaurant makes money:
- Food and beverage cost: what you spent on what you sold, as a percentage of sales
- Labor cost: wages and payroll taxes as a percentage of sales
To get them right, record supplier invoices in the month the food arrives, split cost of goods sold into food and beverage, and count inventory at least monthly. My post on cost of goods sold explains how the inventory count fits into the calculation.
A chart of accounts built for a restaurant
A generic chart of accounts lumps all sales and all costs together. A restaurant should at least split:
| Section | Accounts to split |
|---|---|
| Sales | Food, beverage, catering, delivery |
| Cost of goods sold | Food cost, beverage cost, paper and packaging |
| Liabilities | Sales tax payable, tips payable, payroll taxes payable |
| Expenses | Kitchen wages, front of house wages, delivery commissions, card processing fees |
My chart of accounts guide includes a fuller sample for a small restaurant.
The monthly routine
- Reconcile every bank and card account to its statement.
- Record all supplier invoices for the month, even unpaid ones.
- Count inventory and adjust cost of goods sold.
- Review the profit and loss statement, with food cost and labor cost as percentages of sales.
- File sales tax and payroll on schedule.
If you're not sure what to look for on the monthly report, my guide on how to read a profit and loss statement uses a restaurant P&L as its example.
Want your restaurant's books kept for you?
I've spent 38 years in accounting, and I keep books for restaurants and other small businesses online from Weatherford, Texas, including sales reconciliation, sales tax and payroll. See my bookkeeping services or book a short intro call.
This article is general information, not tax advice for your specific situation. Sales tax and payroll rules are set by the Texas Comptroller, the IRS and the Texas Workforce Commission and can change.