Does My Restaurant Need a Professional Income Tax Return?

The Importance of Hiring Experts in the Food Service Industry for Your Business

As you might imagine, doing taxes for your restaurant or bar and doing them for yourself are completely different operations. On your personal tax return, you provide your various income streams, factor in the taxes you’ve already paid, calculate any deductions, and then see whether you’re getting money back from the IRS or you have to pay more. And that process is difficult enough for many people that they hire a professional to prepare their income tax.

The tax return for your business is more complex by several degrees, as you have to account for labor, taxes, investments, inventory, tips, capital, and more. So why do so many restaurant owners feel they can do their taxes on their own as if they’re filing their personal W-2 online via TurboTax?

Think of it this way: people come to your establishment to dine on food on beverages created by expert chefs, so it’s time you hired expert bookkeepers and accountants to help prepare your income tax return.

If you’re still unsure about the need to invest in professional help for your income taxes, we hope these three proof points will change your mind.

#1 You Must Keep Everything

Does My Restaurant Need a Professional Income Tax Return? | Tabulate

Yes, we mean absolutely everything. You must account for forms like:

  • Invoices
  • Receipts
  • Expenses
  • Payroll
  • Sales reports
  • Cash flow

And that’s just for starters! To complete a thorough tax return that won’t alert the IRS to conduct an audit, you have to present all the financial dealings of your restaurant or bar from the entire year. Not tracking your documents is the biggest mistake a restaurateur can make, even if they’ve contracted with a professional accountant.

Set yourself up for success by creating clear processes for how, when, and where you’ll keep everything for tax season. Better yet, invest in a software and service that helps your restaurant streamline your documentation processes well in advance of tax season.

#2 Tracking Your Deductions is Time-Consuming, but Essential

Does My Restaurant Need a Professional Income Tax Return? | Tabulate

Let’s be clear – step #2 can’t be truly effective unless you’ve followed step #1 to the letter. The list of what you can deduct on your taxes is long, detailed, and complicated, and you need all the information about your expenses and income. Why? Because keeping track of them absolutely crucial to the success of your tax return and business. It includes big-ticket items like:

  • Costs of Good Sold
  • Marketing and Advertising
  • Employee Payroll Taxes
  • Contractors, Repairs, and Maintenance
  • Banking Fees

And that’s just a fraction of the expenses you can count! Sure, you could keep a list of deduction handy for when tax time comes, but it would make more sense to partner with a bookkeeping expert in the food service industry who knows this stuff inside and out.

Besides, wouldn’t you rather spend your time perfecting your menu and increasing the quality of customer service from your staff than attempting to be your own CPA?

#3 Sales Tax Compliance is Your Salvation

Does My Restaurant Need a Professional Income Tax Return? | Tabulate

Even if you execute steps #1 and 2 effectively, you will still be in trouble if your sales tax income and payments are out of whack. Because once you fall out of compliance with your sales taxes, the path back to compliance can be long and costly.

You need your Point-of-Sale system to be aligned and audited to ensure your restaurant or bar collects and reports sales taxes correctly. The best way to ensure sales tax compliance all year long is to work with experts in the food service industry who can prepare your systems for maximum accuracy.

Ready to get your taxes prepared bookkeeping professionals who work exclusively with restaurants and bars? Tabulate will make sure your balance sheet is accurate, your taxes are correct, and your documentation is on-point. We’ll deliver clean books to your CPA so your tax return will be precise and on time.

And if you sign up with Tabulate before 03/01/2019, we’ll even prepare your 2018 income tax return for free. Contact us today!

The Importance of Setting New Year’s Resolutions for Your Restaurant

4 Sublime Suggestions to Help You Secure Sustainable Success

 

The Importance of Setting New Year’s Resolutions for Your Restaurant | Tabulate

Research states that almost half of us set New Year’s Resolutions each year, but only 8% of those resolutions are kept. While that low success rate might be acceptable for your personal goals to lose weight or get better with your own finances (the two most common resolutions), you can and should do better for your restaurant or bar.

Tabulate has decades of experience working with all manner, shape, and size of food-related businesses. As a result, we’ve created a clear set of actionable steps that ensures your restaurant starts January on a path to success and follow it through December. And the best part? You can re-use these 4 resolutions every single year – as long as you have access to your financial data and insights into your performance metrics.

1) Improve Your Systems and Processes

It really can’t get more basic than this one. To truly improve the overall efficiency and efficacy of your staff – both in the kitchen and on the floor – you should locate every opportunity to revisit, review, and refresh how you work. This includes:

  • Inventory
  • POS
  • Bookkeeping
  • Payroll
  • Kitchen Workflow
  • Scheduling
  • Placing and Running Orders

And just because something worked last year doesn’t mean it can’t be improved. You can’t afford to sit still on past performance if you want to achieve growth in the future.

It doesn’t mean you have to re-invent the wheel. Simply find ways to improve the day-to-day operations of your establishment, which helps your employees, your books, and your customers.

2) Enhance Your Online Presence

The Importance of Setting New Year’s Resolutions for Your Restaurant | Tabulate

Unless you’ve been around for literally decades serving only regular customers without ever seeing anyone new walk through your doors, your restaurant or bar needs to be on the Internet. Not only do people increasingly place orders online through restaurant websites, but they use the Internet to learn about your business – whether you’re there or not.

A few introductory suggestions include:

  • Create a website that contains your hours, locations, contact information, and menu.
  • Choose the social media platform where the bulk of your audience hangs out and post LOTS of pictures. And by audience, we mean both your current customer base and the people you WISH were your customers.
  • Have an account on the major online review sites and respond to every review – especially the negative ones.

Getting your place online doesn’t have to be difficult, but you must be strategic and pay attention to what’s happening online.

3) Recruit Your Regulars

Yes, this suggestion isn’t new. In fact, you should always seek ways to increase traffic from your favorite customers. But in a digital world where even one bad review can spell doom for a business, you should seek out new and interesting ways to turn your regulars into your best salespeople.

In an age where influencers are the new marketing currency, restaurateurs will find greater success by deepening their relationships with your most loyal customers. 92% of people say a friend’s recommendation is their most trusted source of information. Hence, your restaurant or bar being at the top of mind for your regulars will go farther to increase sales than the most glowing of professional reviews.

4) Create Clear Revenue Goals

The Importance of Setting New Year’s Resolutions for Your Restaurant | Tabulate

Your goals must be specific. They can’t be something vague like “Increase revenue,” “Increase sales,” “Turnover tables faster,” or “Decrease overhead.” You need to dig into your numbers from the past year to determine what worked and what didn’t work to determine how you can be more profitable in the coming year.

We recommend options like:

  • Increase YOY Sales by X%
  • Decrease Food Waste by X%
  • Increase Weekend Bar Sales by X%
  • Decrease Employee Turnover by X%
  • Increase Margins by X%
  • Decrease COGS by X%

As one of our favorite marketing gurus frequently states, “If you can’t measure it, you can’t improve it.” You must know what’s happening in your books if you have any hope of creating and meeting your revenue goals.

This is where Tabulate can help you shine in 2019. As a comprehensive back-office solution, we provide expert bookkeeping, payroll, and financial services designed specifically for the food service industry. Our staff has over 75 years of experience working exclusively with restaurants, bars, and related businesses. We can balance your books, process your payroll, pay your vendors, deal with the TABC, and help you understand your financial and performance data better than ever before.

If you think your establishment needs help setting and achieving its goals for 2019 and beyond, contact Tabulate today!

Happy Holidays!

The Tabulate POS Configuration Checklist

At Tabulate, we work with all major point-of-sale systems. In fact, the entire point of our software and services removes the need for you as the customer to do any data entry when it comes to getting sales data into our platform. Our experience working with such systems on a daily basis has led us to create our 4-point POS configuration checklist designed to ensure you’re tracking everything correctly in your restaurant or bar.

The Tabulate POS Configuration Checklist | Tabulate

While we recommend Toast, Tabulate works with the following POS systems:

  • Toast
  • Aloha
  • Revel
  • Breadcrumbs
  • Focus
  • Radiant
  • Shopkeep
  • Square
  • Bestring
  • Clover
  • Compeat
  • Rpower
  • touchbistro
  • Revolution
  • Shopkeep
  • Union
  • Revel
  • Micros
  • PDQ

Ready to learn more about how Tabulate can help your establishment find long-term financial success? Let’s talk!

Set the Table for Server Success During the Holidays

3 Terrific Tips for Helping Your Staff Thrive All Season Long

Set the Table for Server Success During the Holidays | Tabulate

With any luck, you followed a few of our holiday marketing tips, and the customers are now filling up your restaurant to take advantage of your seasonal promotion. Before you get too excited about the promise of increased sales, visits from regulars, and an influx of new patrons, you should first ensure that you’re creating an environment primed for server success during the holiday season.

Yes, you do need people to visit your establishment for it to thrive but having a superior staff to take care of those customers is the foundation to a sensational holiday season. With our 3 tremendous tips, you can prepare your people to deliver top-quality service, food, and beverages to your customers with holiday flair.

#1 Be Upfront with Scheduling and Staffing

To put it another way, remember that your servers and staff are real people who also want to be with their friends and family for the holidays. Yes, you want to have more than enough people to cover the above-average traffic that usually comes with holiday dining, but you won’t find server success if you over-tax your people during one of the most stressful times of the year.

This will require some forethought and planning on your part:

  • Investigate your numbers from previous seasons.
  • Determine when you’ll need more people and how many people that will be.
  • Calculate if you have the space in the budget to bring on seasonal staff.
  • Discuss with your long-term staff what the holiday schedule will look like and when the best times might be for any time off.

Your staff will appreciate that you trust them enough to be reasonable about staffing and holiday time off. Give them the option to make deals and trades with each other – as long as the floor is covered to the level that you deem best. It’s still your restaurant, but your servers and kitchen will like having a bit of voice in their schedules.

#2 Increase Your Communication

Set the Table for Server Success During the Holidays | Tabulate

Let’s take tip #1 a few steps further. We’ve seen far too many restaurateurs share the details promotions with their customers via marketing efforts but forget to do with their staffs. This creates confusion on the part of the patrons when they ask for your seasonal special, only to have the server not know what’s happening. In turn, this creates resentment with your servers because they looked uninformed and unprofessional when presented with the customer’s order.

Ultimately, your poor communication can result in decreased tips for your staff, lower revenue when people can’t order the high-margin special, and bad reviews when your staff can’t fulfill the terms of the promotion to the customer. All the planning you put into your promotion will be for naught because you didn’t put equal effort into cultivating server success.

#3 Invest More Time and Attention Than Usual

Any restaurant manager worth their salt knows exactly how busy and stressful the holidays can be in the food service industry. Just think of everything going on all season long:

  • The customers might be overtly joyful, but underneath, they’re probably stressed about money, family, and schedules.
  • More people are visiting your restaurant, which can mean longer wait times, packed seating areas, and simply more activity in an average shift.
  • Your staff is working longer hours than usual while dealing with the increased customer count.
  • You have to prepare well in advance for any sort of promotion, especially if you’re changing what and how you order from your suppliers.

To truly prepare your servers, staff, and restaurant for holiday success, you need to be an even better leader than normal, and it’s your job to help your people be the best they can be. We recommend the following steps:

  • Create consistent messaging around any promotion or special
  • Take time to train seasonal staff sufficiently
  • Give increased latitude to senior staff to be problem-solvers
  • Address the big issues directly and with clear answers
  • Deliver sincere praise to your staff
  • Provide constructive criticism when something can be improved

Each of these tips increases the burden on you to execute your vision with increased patience, care, and attentiveness, your staff depends upon your leadership to guide them into the great success everyone hopes to achieve. Server success means giving your staff the tools and resources they need to help your customers more effectively, which directly increases the likelihood those visitors spend more on that holiday visit and then return in the future.

You Can Successfully Tackle Your TABC Mixed Beverage Taxes

3 Terrific Tips for Keeping the TABC Happy

You Can Successfully Tackle Your TABC Mixed Beverage Taxes | Tabulate

No matter the size of your establishment or the demographics of your regular customers, you must pay your mixed beverage taxes correctly, or you’ll be in world of trouble with the Texas Alcohol and Beverage Commission (TABC).

If the TABC finds you in violation of those fees, you will face stiff penalties, including:

  • Suspended license
  • Heavy fines
  • Increased bond requirement (up to 4 times your average monthly sales volume)

Tabulate recognizes how difficult tracking your drink taxes can seem, especially to inexperienced owners opening their first Texas restaurant or bar. With over 75 years of experience exclusively with the food service industry, our expert bookkeepers have three tried-and-true tips to help you find success with the TABC.

#1 Track Your Sales Properly

First things first: you need to track liquor, beer, and wine revenue separately. Yes, they are all forms of liquor, but you have to properly remit taxes on the sales of each item. That means accounting for the amount of booze you use for each and every mixed drink by ensuring that your POS system know exactly what goes into every drink on your menu.

That’s the obvious stuff, so what about comps? It’s a little-known fact in our industry that Texas also collects tax on the drinks you give out to your customers as compensation – no matter the reason.

To make sure you quantify and pay these taxes properly, Tabulate always recommends that you code comps in your POS according the item being comped, not according to comp reason.

  • Correct:  Comps labeled as “Comps- Liquor”
  • Incorrect: Comps labeled as “Comps- Bad Service”

This POS configuration is the only way you can ensure your totals add up correctly.

#2 Pay Your Bills on Time, Every Time

You Can Successfully Tackle Your TABC Mixed Beverage Taxes | Tabulate

You must pay your bills to your alcohol distributors by the 10th and the 25th of each calendar month. If your bills are paid even a day late, the distributor can choose to report you to the TABC for non-compliance. And if you get on “The List,” the TABC can make sure that distributors won’t sell to you.

Since the liquor vendors are supposed to turn in customers for non-payment, there is an unwritten grace period that many of them follow. They will often call people directly to request full payment or set up a payment schedule before reporting to the TABC.

All of this means you have to manage your cash flow very carefully.  A good bookkeeper will keep you apprised of your cash flow situation to help you prioritize and pay your bills so you stay out of hot water.

#3 Don’t Think You Can Fly Under the Radar

On average, the TABC will audit each licensed establishment once every 5 years. The state knows exactly how much inventory you have purchased because they get regular reports from all licensed distributors.

So, if you think you can hide, you’re wrong!

Unlike other types of audits, this TABC 5-year audit is a depletion audit. This unique audit gives the TABC permission to guesstimate the revenue you should have made and then assess a tax bill based on that estimate. If you don’t like that tax bill or estimate, you have to prove to the TABC they are wrong, or they are legally allowed to fine you!

If you want to find success with your mixed beverage taxes and the TABC, your Texas restaurant or bar must have clean books and a properly configured POS system. Standing up to TABC levels of scrutiny requires the careful attention to detail that you can only obtain from the professionals at Tabulate. With 75+ years of experience delivering bookkeeping services exclusively for the food service industry, we provide bookkeeping, bill pay, detailed analytics, and financial statements for independent restaurant and bar owners starting at $299/mo.

Contact us today to learn more about how we can help your business!

Where Does the Money Go in My Restaurant?

Understanding the Cost Breakdown in Your Establishment

Where Does the Money Go in My Restaurant?

No matter the size, shape, or format of your establishment, you must maintain a regular insight into your budget. While this seems fairly obvious, it’s absolutely that you maintain a firm grasp on where, when, and how your money flows.

You must develop a nuanced understanding of your expenses if you want to first break even on your initial investments and then start generating regular profits. Let’s start this discussion by identifying the places your money goes on a regular basis:

  • Rent
  • Marketing
  • Insurance
  • Payroll
  • Taxes
  • Inventory
  • Equipment
  • Bookkeeping
  • Maintenance
  • Supplies
  • Utilities
  • Technology

And this doesn’t even count paying off loans and other expenses related to opening a brand-new establishment. This is just the day-to-day stuff that you’ll see in any average balance sheet or Profit-and-Loss Statement. Luckily, those above items can be lumped into three basic categories:

  • Food and Beverage Costs
  • Labor
  • Operating Costs

What matters most is maintaining a healthy ratio between these three and the profits you should earn if you hope to build and sustain success. Most food service industry experts recommend keeping your Prime Costs (Food + Labor) between 60-65%. You should keep your operating expenses well under 30% if you have any hope of breaking even, much less earning a profit.

Ready to get into the numbers behind your money a bit?

Food and Beverage Costs

This one is straightforward. You have to pay for the materials that you’ll then shape, cook, and prepare into the items you sell. The tricky part is determining how much to sell a dish or drink for compared to what you spent to purchase the components.

In restaurant accounting parlance, this concept is called “Food Cost Percentage.” It’s calculated by dividing the Cost of Food by Total Sales. For example:

  • Your food and beverage sales were $3,000.
  • You spent $1,000 to buy the goods for the items you sold.
  • $1,000 / $3,000 = 0.33 = 33%.

What your establishment sells can directly impact those percentages. Some expensive items will be loss leaders, as it costs you as much to purchase that tasty steak or rare fish as it does to sell it. This can be made up in the sale of beverages and desserts, which historically have much higher margins.

Having a firm grasp on these specifics will help you learn exactly what items you need to push at which times of day. It will be especially helpful if you need to strike a firmer balance on your Food Cost Percentage.

Labor

Unless you’re running a food cart where you’re the only employee, you will have to pay the people who work for you. And even in that instance, paying yourself a salary needs to be tracked separately from your profits.

Labor costs include items like payroll, tips, benefits, and anything else directly related to your employees (including training, but excluding supplies). To determine the Labor Cost Percentage, you divide Labor Costs / Total Sales. Extending our earlier example:

  • Your food and beverage sales were $3,000.
  • You spent $900 on your employees.
  • $900 / $3,000 = 0.3 = 30%.

Labor might be a more pronounced variable cost than food and beverages, because your employees have a voice. While food costs have risen slowly but consistently over the past few years, labor costs have increased at a higher rate. This is especially true when you factor in benefits like health care and the push for higher minimum wages.

Operating Expenses

As you’d imagine, this category comprises everything else in your establishment: rent, overhead, toilet paper, napkins, cutlery, utilities, marketing, your Point-of-Sale system, your bookkeeper, your accountant, and more. However, this is not a place to nickel-and-dime the money you spend in hopes of dramatically cutting costs. For example:

  • Rent might be high, but you might be in a great location that generates more sales than a cheaper place one neighborhood over.
  • Marketing your business is important, especially in the age of the smartphone.
  • Paying your utility bills keeps your doors open.
  • People want to visit a restaurant or bar that’s clean and has a specific aesthetic.

These categories represent a prime opportunity for you to lose track of what’s happening – and quickly. While an individual cost might be small compared to payroll or liquor, you need to keep them collectively under 30%, especially if you’re struggling to keep Prime Costs under 65%.

The Tabulate Difference

Running a restaurant or bar is not all fun and games, despite what Cheers might have taught us in the ‘80s. So, as much as you might objectively love your menu and customers, you’re still operating a business. And that means constantly paying attention to your money.

This is what sets Tabulate apart from its competitors – and your friendly neighborhood accountant. We integrate directly with your POS system to examine your sales, costs, expenses, profits, and margins in great detail. Our job is to crunch your numbers and then provide you with accessible and understandable reports laden with suggestions and recommendations you can use to make your business succeed.

To learn more about what we can do for your establishment – from franchises and high-end restaurants to dive bars, coffee shops, food trucks, and everything in between – visit Tabulate.com today!