Bookkeeping for Restaurants: From Daily Sales to Monthly Books

How daily sales become monthly books

A restaurant is a busy business. Money comes in from breakfast, lunch and dinner. Some of it is cash. Some of it is cards. Some of it is gift cards. At the end of the night, the register prints a report that sums up the day.

The daily sales report is where your books start. It shows what you sold, how much was cash, how much was card, and how much came back as change. When each day gets its own entry, the month adds up to one clear picture.

The problem is that most owners are tired at the end of the night. The sales report sits in a drawer. A week goes by, then a month. Now you have a stack of reports and no idea where the money went. We take that stack and turn it into books that make sense.

The Z report and the daily sales entry

The Z report is the end of day report from your point of sale system. It closes out the register for the day. The name comes from the old cash register term for the final reading of the day.

Every Z report has the same basic parts. Gross sales for the day. Sales tax collected. Cash paid out, like tips or petty cash. Card totals, before the fees. The net amount that should match what you drop in the bank.

Here is what a clean daily entry looks like.

When each day goes in the same way, the month is easy. You can see sales, tax and cash side by side. At the end of the month, the total sales line is real, not a guess.

How to track food and beverage costs

Food and beverage are the biggest cost in a restaurant. Every plate you sell started as something you bought. If you do not track what you bought and what you sold, you cannot tell if the kitchen made money.

The simplest way is to count what you buy and count what you use. Each week, add up the food and drink you bought from your suppliers. Each month, count what is still on the shelf. What you bought plus what you had at the start, minus what is left, is what you used. That number is your cost of goods for the month.

When you compare cost of goods to your sales, you get your food cost ratio. That ratio tells you if your prices are right. If the ratio jumps, something is wrong. Maybe a supplier raised prices. Maybe the kitchen is wasting food. Maybe portions got bigger. The books show it first.

Here is a simple monthly check.

• **Add up all food and beverage purchases: ** what you bought from every supplier.
• **Count what is still on the shelf: ** the inventory at the end of the month.
• **Subtract the ending inventory from what you bought plus last month's inventory: ** that is what you used.
• **Divide the cost of goods by the food and beverage sales: ** that is your food cost ratio.
• **Compare it to last month: ** a jump means you should look closer.

Beverage is a little different. A bottle of wine costs less than what you sell it for by the glass. Tracking pour cost, which is the cost of the drink compared to what you charge, tells you if the bar is making money. The same rule works for beer and spirits.

How to track cash and tips

Cash is the part that goes wrong the most. The drawer opens all day. Change goes out. Tips come in. At the end of the night, the drawer should match the Z report. When it does not, someone has to find the gap.

A clean cash routine helps. You count the drawer at the start of the day and at the end. You write down what was in it. You drop the cash in the bank or a safe. The next morning, you start the drawer with the same amount.

Tips are part of the cash story. When a customer pays a tip on a card, the card processor sends it through later. When a customer leaves cash, it sits in the drawer. Some restaurants pool tips and split them among staff. Some let each server keep their own. Either way, the tips need their own line so they do not get mixed with sales.

Here is what should stay separate.

When tips sit in their own place, the sales line stays clean. You can see what the restaurant earned and what the staff took home.

How gift cards work in your books

Gift cards are a common source of mistakes. A customer buys a gift card today and uses it next month. If you book the sale as income when they buy it, your sales look high this month and low next month, for no reason.

The right way is to hold the gift card sale as a liability, not income. When the customer buys the card, you record it as money you owe them. When they come in and use it, you move it to sales. That way the sale lands on the day the food went out the door.

Here is the simple rule. The gift card is a promise to feed someone later. It becomes sales when the food is served, not when the cash comes in.

A gift card that never gets used is still a liability until you decide otherwise. If you want to clear old cards off the books, ask your CPA how to do it the right way.

Sales tax is not income

When you collect sales tax, you hold it for the state. It is not money you earned. If it sits in your sales line, your income looks too high and you may think you have more cash than you do.

Each day, the Z report shows the tax you collected. We move it to a sales tax liability account, away from sales. When the tax is due, the money to pay it is sitting where it should be. Your sales line shows only what the restaurant earned.

This is the same idea for the kitchen as for the bar. The tax belongs to the state. The sales belong to you. Keeping them apart keeps both numbers right.

A situation we clean up

The register that stopped syncing

A point of sale system stops sending sales to the books. A few days go by, then a week. The daily entries stop, and no one notices until the monthly sales look wrong.

Here is how we handle it. We pull the daily sales reports for the days that went missing. We enter each day from the Z report, the same way as the rest. We check the cash deposits against the bank. We match what we find. When we are done, the month is whole again, and the owner can see the true sales. We set up a simple check so the gap shows up sooner next time.

How we do it

We do monthly bookkeeping and payroll. We work in QuickBooks Online and Xero, and we are QuickBooks Online Accountants, called QBOA. Each client gets one dedicated bookkeeper who learns your business.

We categorize and reconcile in the first week. We send you one list of questions on day 8. We close your books by day 10 and send a profit and loss statement, a balance sheet, and a cash summary. We use read only access, and we never ask for your bank password.

We serve small businesses in Rancho Cucamonga, Ontario, Fontana, San Bernardino, and across the Inland Empire and the country. There is no long contract. It is month to month, with 30 days notice to stop. You can read more about how we work on our bookkeeping service page.

Mistakes we fix

• Daily sales entries that stopped for days or weeks
• Sales tax counted as income
• Gift cards booked as sales the day they were bought
• Food and beverage costs all in one overhead line with no ratio
• Tips mixed into the sales line so income is overstated
• Cash drawer counts that do not match the bank

What we do

We do two things: monthly bookkeeping and payroll. For bookkeeping, we categorize and reconcile in the first week, send one list of questions on day 8, and close the books by day 10. You get a profit and loss report, a balance sheet, and a cash summary. We start with a free 20 minute call and reply with a fixed quote in one business day.

Common questions

How do I track daily sales? Each day, enter the totals from your Z report. Sales, tax, cash, cards and tips each get their own line. When each day goes in the same way, the month adds up to a true picture.

Do I book gift cards as sales when I sell them? No. Hold them as a liability until the customer uses the card. The sale becomes income when the food is served, not when the card is bought.

Is sales tax part of my income? No. Sales tax is money you hold for the state. It goes in a liability account, not in sales. Your income line should show only what the restaurant earned.

Do you do payroll for my kitchen and front of house staff? Yes. Payroll is one of our two services, along with monthly bookkeeping.