Even if you run a small restaurant, you will need to keep accounting records in order to file and pay taxes, and understand the financial workings of your business. Some restaurant accounting, such as closing out register totals, should be done daily. Other tasks, such as payroll, can be performed weekly or every other week. Tallying an expense ledger is usually a monthly task, and payroll tax forms must be completed and filed quarterly.
A small restaurant should keep records of its sales revenue after each meal shift as well as totals for each day. Even relatively simple cash registers will print reports tracking food sales in different categories such as entrees, appetizers and beverages, as well as sales-tax totals and amounts that customers pay in cash, checks and credit cards. Creating a spreadsheet that tracks totals in each category for each meal enables you to identify and prepare for busy shifts and compare sales across different days and weeks.
Your cooks and servers depend on your payroll system to write their weekly paychecks and withhold income and Social Security and Medicare taxes. Most restaurant employees earn wages rather than salaries; multiply employee hours by their hourly wage to determine base payroll amounts. Servers and bartenders are also liable for payroll taxes on income they earn in tips, so ask them to report their tip income on their time sheets. Deduct income tax using IRS tax tables, and multiply tip and wage income by .0565 as of 2012 to determine Social Security and Medicare withholdings.
Adding up your restaurant’s expenses will help you to determine how much you have actually earned. Keep all of your sales receipts, organize them by date and enter the totals in a ledger divided into columns that correspond to categories of expenses. Devote columns to food and alcohol purchases, as well as payroll expenses, rent, utilities, advertising, maintenance and repairs. Calculate your total monthly expenses in each category and then add all of the categories to calculate your overall monthly expenses. Subtract your expenses from your revenue to determine net profit.
Your restaurant must periodically report sales and payroll amounts to various state, local and federal governments, and pay taxes on these amounts. Restaurant sales are retail sales, which are subject to local and state sales taxes in most states. Payroll amounts are subject to state unemployment insurance and industrial insurance taxes. In addition, you must remit withheld federal payroll taxes along with your employer’s share of Social Security and Medicare taxes. Deposit schedules for these taxes vary relative to your payroll volume and the schedule that the IRS provides for you when you register as an employer. As a business owner, you must also pay federal income tax annually based on your restaurant’s net profit.