Restaurant accountant in Oshawa

Food cost is the number that decides the year

Food and beverage cost is the largest line a restaurant controls, and it moves quickly. A supplier price increase, a portion that drifted, a walk-in that lost power, a menu item priced before costs rose: each shows up first as food cost creeping up as a share of sales. Measured once a year, that tells you what went wrong last year. Measured monthly, from supplier invoices posted as they arrive and a count at month-end, it tells you what to change this month.

We post purchases by category, food, alcohol, non-alcoholic drinks, packaging, so the cost of each can be set against its own sales. Alcohol in particular is worth watching on its own line, because its margin and its shrinkage behave differently from the kitchen’s. When the numbers say a dish is not paying its way, pricing review helps decide whether to reprice, re-portion or drop it.

Cash is the other number to watch. Rent, payroll and the HST remittance land on fixed dates, while sales swing with the season, the weather and the university calendar. A restaurant that sets HST aside from each deposit, rather than finding it at filing time, avoids the month where everything falls due at once. Managing seasonal cash flow and cash flow management cover the approach.

The POS and the cash drawer, every day

A restaurant’s books start with the point-of-sale end-of-day report. That report has to be split into card sales, cash, gift cards, tips owed to staff and HST collected, then matched to what actually reached the bank. Card settlements arrive a day or two later, net of processing fees. Delivery app payouts arrive weekly, net of commissions and promotions. Cash is deposited on its own schedule, sometimes after petty cash purchases have come out of it.

If the deposits are posted as sales, the fees vanish, HST is misstated, and cash shortages hide. If the POS report is posted and reconciled to deposits, every gap has a name. That is also what the CRA looks for in a restaurant review, where unreported cash is the standard concern. See why reconciliation matters and the month-end close.

Tips, payroll and who controls the money

Tips are the payroll question every restaurant has to get right. The treatment turns on control. Tips a customer hands directly to a server, and that the employer never touches, are generally not pensionable or insurable, although the server still reports them as income. Tips that pass through the employer, collected on the card terminal and distributed by a formula the employer sets, are generally treated as controlled tips, subject to CPP and EI, and reported on the T4. A tip pool can fall on either side depending on who runs it.

Ontario employment standards also limit what an employer can do with employees’ tips, including deductions from them, and owners generally cannot share in a pool except in limited circumstances. We set up the payroll to match how your tips actually move. Tip reporting and payroll explains the distinction, and payroll services in Oshawa covers the rest of the pay run.

HST on the bill, and on what you buy

Restaurant meals and drinks in Ontario carry 13% HST, collected on the bill and remitted on the HST return. On the purchase side, HST paid on supplies, equipment, rent, utilities and repairs is recoverable as input tax credits. Many groceries, the basic ingredients of a kitchen, are zero-rated when you buy them, so there is no HST on those invoices to recover, while packaging, cleaning supplies and alcohol carry tax. Coding each supplier invoice correctly is what keeps the credits accurate.

Once taxable sales pass $30,000 over four consecutive calendar quarters, registration is mandatory, which a busy restaurant does quickly. Some smaller operators consider the quick method; whether it helps depends on how much taxable input the kitchen buys. See the quick method.

Equipment, leaseholds and the renovation question

Opening or refitting a restaurant means spending on things that last: kitchen equipment, furniture, point-of-sale hardware and the build-out of a leased space. None of it is expensed on purchase. Equipment goes into capital cost allowance classes, and leasehold improvements are claimed over the term of the lease, so a renovation cheque is a deduction spread over years rather than a loss this year. Repairs that restore something to its original condition are different, and are generally deductible when made. Separating the two on the invoices at the time saves an argument later. CCA classes covers the categories.

What EverStone handles for you

One CPA, one fixed fee agreed up front:

• Daily POS reports reconciled to card settlements, cash and delivery payouts
• Purchases coded by category for monthly food and beverage cost
• Tip treatment set up to match how tips move
• HST returns with input tax credits coded invoice by invoice
• Equipment and leasehold CCA schedules
• T2 corporate return and year-end financial statements
• T4 slips by the end of February

Fixed fees, fully online

EverStone is an Abbotsford CPA firm, and Oshawa runs ahead of us on Eastern time, so questions sent after the lunch rush are answered the same afternoon. Everything runs by video, phone and secure upload, and the POS and bank feeds connect directly to cloud accounting software you own. Monthly bookkeeping starts at $300 a month with HST filing included, and the fee is fixed before work starts. See what it costs.

Remote restaurant accounting from Abbotsford

Restaurant accounting for Oshawa clients is delivered remotely from Abbotsford, British Columbia. There is no Oshawa office and no local team. Meetings are virtual, documents are signed electronically, and you deal with the CPA directly. Sales, purchases and tips are reconciled as they happen rather than reconstructed at year end.