Restaurant accountant in Toronto

Food cost is the number that decides the year

In most businesses cost of goods is a line on the return. In a restaurant it is the operating dial. A few percentage points of food and beverage cost is the difference between a profitable year and a break-even one, and it moves weekly with supplier pricing, portioning and waste. That only becomes visible if purchases are coded consistently and inventory is counted on a real schedule rather than at year-end. We set the bookkeeping up so the number is available monthly, because a figure you see in April cannot change anything.

Tips, payroll and the part that goes wrong quietly

Hospitality payroll is more complicated than headcount suggests. Tips can be direct or controlled by the employer, and the treatment differs — controlled tips generally run through payroll with the withholdings that implies, while direct tips between guest and server behave differently. Getting the distinction wrong is not a small filing error; it creates unremitted source deductions, and remittance failures carry penalties attached to the deduction rather than the tax. Add high turnover and year-end slips for staff who left months ago, and payroll becomes the single most error-prone part of a restaurant file.

HST when the menu is not uniform

Not everything you sell is treated identically. Prepared food and beverages, packaged goods sold to take away, catering and delivery through a third-party platform can each behave differently, and platform fees deducted before the money reaches you are still deductible business expenses that operators routinely miss by recording only the net deposit. Setting the point-of-sale up to reflect the rules once is far cheaper than reconciling it every quarter.

Equipment, leaseholds and what happens when you renovate

Kitchen equipment, refrigeration and dining-room fit-out are capital assets recovered through capital cost allowance at rates set by their class, not expenses in the year you buy them. Leasehold improvements — the build-out in a space you do not own — are treated differently again. A renovation is therefore a tax decision as much as an operational one, particularly around timing relative to your year-end, and it is worth a conversation before the deposit rather than after the invoices arrive.

Multiple locations, one set of numbers

The second location is where restaurant accounting usually breaks. Two POS systems, two payroll groups and two sets of supplier accounts produce numbers that do not reconcile, and by the time the year-end reveals it the operating decisions have already been made on bad information. Location-level reporting has to be built deliberately — it does not appear on its own — and it is the difference between knowing which site is carrying the other and guessing.

Cash flow, and the month the rent lands wrong

Restaurants fail on cash before they fail on profit. Rent, payroll and supplier terms all run on their own cycle, and a quiet fortnight lands on a fixed cost base that does not flex. A restaurant can be profitable across a year and still be unable to make a specific Friday.

The accounting response is not complicated, but it has to be deliberate: knowing your fixed monthly nut, watching the payroll and rent dates against realistic revenue, and keeping GST and source deductions genuinely separate from operating cash. Sales tax collected and source deductions withheld are not your money — they are held on behalf of others, and spending them to cover a slow week is the single most common way an otherwise viable restaurant ends up in a payment arrangement with CRA. If that has already happened, it is fixable, and moving early materially improves the outcome.

Switching accountants mid-year

Hospitality owners put this off because there is never a quiet moment. In practice the handover runs in the background: we request prior records and working papers, review the last filed return so opening balances are right, and pick up the compliance calendar wherever it stands. Service is not affected. See switching accountants.

What EverStone handles for you

One CPA, one fixed fee agreed up front:

• T2 corporate return and year-end financial statements
• Food and beverage cost tracked so the number is usable monthly
• Payroll including tip treatment, remittances and year-end slips
• HST set up correctly across a mixed menu and delivery platforms
• Equipment and leasehold improvement schedules
• Location-level reporting where you run more than one site

Fixed fees, fully online

EverStone is an Abbotsford CPA firm working with Toronto operators entirely online — video, phone and secure upload. We are three hours behind you, so something sent at close is usually answered before service the next day. The fee is fixed and agreed before work starts. See what it costs.