Effective Restaurant Accounting Tips to Keep Your Finance In Check
Effective accounting is equally essential as having a good chef to run your restaurant successfully. Food is a lucrative business industry and the Middle East is the hub of delicious culinary delights from all over the world. After all, one of the most important parts of travelling to a foreign country is to indulge in local and global cuisine. Setting up a restaurant instil food safety standards and it is equally important to manage the restaurant accounts smartly for running the business efficiently. To make it easier for you, we have compiled some useful restaurant accounting tips to keep your finances in check.
Restaurant Accounting Tips
Restaurant accounting doesn’t have to be dreaded and put off until the last minute. There are a lot of ways to simplify and streamline the restaurant accounting process. CDA has a team of accounting professionals who provide outstanding restaurant accounting services in UAE to keep your restaurant finance in check. Here we provide a restaurant accounting guide that helps you to manage your restaurant finances better
Regular Budget Reviews
Review the Purchasing budget weekly and look out for any abnormalities. At times, the variances in the budget should be considered seriously and consulting as well as taking the services of a professional expert will help to minimize the variances.
Track your Inventory
The food and beverage, along with labour costs, is the largest expense in the business. The food cost percentage enables us to understand the impact of inventory in the business.
Food cost % = (Opening Inventory + Food Purchases – Closing Inventory) / Food Sales
To understand more on the topic of accounting experts in CDA Accounting and Bookkeeping Services LLC will extend professional assistance. Designate responsibility for a daily inventory routine and assign people to ensure accurate counts. Perishable items should be checked daily, and non-perishable items counted once or twice a week.
Pay Your Taxes
Almost all the restaurants operating in the UAE have to register for VAT. The tax could be collected from customers on each supply and the input tax can be availed on the VAT paid on the expenses incurred for the business. Following are the general cases where restaurants are allowed to claim an input tax credit in the normal scenario:
- Purchase of Food items
- Restaurant Rent
- Packing Materials
- Delivery Vehicles
- Equipment used in Kitchen for cooking
- Furniture and Fixtures
- Office equipment’s
In UAE, the VAT registered restaurants are required to issue VAT invoices to its customers so as to comply with the VAT laws. Restaurants businesses in the UAE are required to maintain all the business records and documents for a period of 5 years.
Hire an Accountant
Whether it is with starting out in the restaurant business or have been in the business (and the accounting) for years, hiring an accountant is a great way to ensure that everything is being done correctly, that the business is profitable, and in compliance with all federal, state, and local tax and payroll laws.
The Cost-to-Sales Ratio helps to analyze the financial health of the business. Calculating this ratio allows you to compare your business to other businesses without sacrificing accuracy. Managing the food cost enables us to understand the exact performance of the business and what improvements are required.
New Option During COVID -19
With the current scenario of some restaurants still being closed or only allowing a few customers for dine-in, it is worth exploring takeaway and delivery services for your customers. Some restaurants are working with third-party delivery systems. Maintaining an own delivery team can be cheaper than using third parties, as it will keep all of the revenue and can better control the customer experience while preserving the brand as well as hygiene requirements.
How about reading, Impact of Corona Virus on UAE Economy?
Is Cost Allocation required?
There are many costs involved in the business and this is where the necessity to maintain a cost allocation tool arises. Cost allocation is used in the calculation of profitability at the department or subsidiary level, which in turn may be used as the basis for bonuses or the funding of additional activities. There are few methods for allocation of costs. The goal is whichever cost allocation method you use, is to either spread the cost in the fairest way possible or to do so in a way that impacts the behaviour patterns of the cost objects.
Why choose CDA?
If all of the above feels overwhelming, we at CDA would always remind all businesses that relatively small fees you pay for these services can save you serious time and stress, which could be focused in other areas of the business. CDA is a team of such skilled, efficient, and experienced professionals who can keep your business financials on track, who can keep you well-informed of the financial status of the business. CDA can identify potential risks and make suggestions to you to head those complications off before they deteriorate. CDA experts are one of the best catalysts in the field of Business Consultancy Services, CFO Services, Tax Consultation Services, Due-diligence Services, Accounting & Auditing Services.
Feel free to contact us if you have any queries or doubts regarding restaurant accounting services; our accounting experts will contact you immediately.
You may also like to read, Benefits of Outsourcing Accounting Services for Business in UAE