5 Mistakes That Cost New York Restaurant Owners Money
How can you tell that your New York restaurant is doing well? It may be because:
- Your staff seems happy.
- Every night, you have a waitlist, and your clients leave good reviews on Yelp.
Of course, all these reasons may cause you to believe you are running a healthy business as a New York restaurant owner, and the only thing is that none of these show increased profitability. As such, reviewing your books from time to time will help you understand how your restaurant is doing.
According to recent statistics, the expectation is that the market size of New York restaurants will increase by 4.3% in 2022. At the moment, the market size, measured by revenue, stands at $18.5 billion.
Understand that finances are a critical part of your restaurant’s daily operations, suggesting that any cash you save or spend impacts your bottom line in one way or another. On the other hand, New York restaurant payroll calculations are complex and subject to an ever-changing litany of regulations. As such, mistakes become inevitable when you choose to handle payroll manually.
That explains why you should consider Premier Payroll Solutions as a restaurant owner in New York. Also, the payroll tax is complicated for restaurants since workers often receive multiple types of compensation, including a minimum wage, tips, and salaries. The IRS treats all these separately, making legal compliance challenging.
Premier Payroll Solutions can help you surmount these issues to avoid unnecessary losses. Here are some of the top mistakes that cost New York restaurant owners money.
Top 5 Mistakes That Cost New York Restaurant Owners Money
1. Failure to Report All Taxable Forms of Compensation
First, understand that most fringe benefits like employee discounts, stock options, and achievement travel are subject to federal income and employment tax withholding. Reporting these forms of compensation as a New York restaurant owner to the IRS is paramount. Otherwise, you may face significant penalties that will cost your restaurant dearly, and Premier Payroll Solutions can take care of that to ensure compliance.
2. Lack of a Reliable Accounting System
Having a proven accounting system is not an option if you want to manage your New York restaurant payroll better. Knowing how to run a kitchen is one thing and managing your financials is another thing altogether. For that reason, some restaurant owners in New York choose to hire accountants, while others prefer to rely on DIY solutions like QuickBooks for all their accounting.
The only issue here is that one needs to manage their restaurant based on their account books. Note that the ideal accounting system should help identify red flags and follow industry standards. Software and cloud-based solutions ease the process of setting up your restaurant’s accounting system and promote accuracy.
Also, a reliable accounting system gives you a better grasp of your restaurant’s financials and ensures that controls are in place to help you manage your establishment better. Failure to invest in an ideal accounting system for your restaurant can cause a lot to go wrong since tracking key financial issues becomes impossible in this case.
3. Failure to Reconcile Bank and Credit Card Balances Monthly
If you own a restaurant in New York, you probably have a lot on your plate, and sometimes, tasks may slip through the cracks. That includes forgetting/failing to reconcile your bank and credit card balances monthly. Avoiding major issues is possible when you spare time to ensure these balances match. Note that it is common and perfectly natural for accounting errors to happen a few times a month.
So, failure to reconcile your bank and credit card statements monthly implies that you will not identify such errors. As a result, the funds available may be insufficient, or you may eventually discover that the overhead you imagine you have is unavailable. Some of the issues you may address by reconciling your restaurant’s bank and credit card statements monthly include the following:
- Loss Prevention – You can tell if money is missing by reviewing your financial statements. Understand that any small amounts of money missing each month will add up over a fiscal year.
- Whether You Have Paid All Your Expenses Or Not – For instance, if a supplier claims you have not paid them, you can identify a check that is yet to clear or other missing payments by reconciling your statements.
- Tracking Your Monthly Expenses and Revenue – Reconciling your monthly statements helps track your restaurant’s spending and income. After, you can compare the figures to your 4-week financial period to check if you are operating within budget or otherwise.
- Assessing Your Establishment’s Health – Knowing exactly where your money is going as a restaurant owner should be a priority, and that is possible by reconciling your monthly bank and credit card statements.
4. Absence of Inventory Accountability
Undoubtedly, inventory accountability is a critical part of the operations of any restaurant within New York. Failure to have firm control over your restaurant’s inventory means you cannot tell what is stolen or discarded. In that case, you need to count and cost your inventory weekly instead of monthly or before restocking. The information you retrieve, in this case, can help you:
- Detect food wastage.
- Reduce excess spending.
- Identify food theft.
5. Viewing Your Financials on a Cash Basis
Looking at your finances on a cash basis instead of an accrual basis is the other mistake you should avoid as a New York restaurant owner. The reason is that proper accounting demands that you consider both revenue and expenses. In the case of cash accounting, recording expenses and earnings will happen when you make payments and not when rendering services.
The implication is that if you order maintenance work on an oven in your kitchen and payment fails to happen until the following month, the time for reflecting the expense will not be correct. When that happens, seeing the proper balance of profits and losses during a particular period will be a problem. Looking at your finances on a cash basis prevents you from accessing accurate figures.
Avoiding the mistakes above puts you in a better position to manage your restaurant successfully. If you need a free quote from your local New York restaurant payroll provider, contact us today!