Accounting for restaurants and hospitality

Hospitality is the small business sector where the accounting has to be tightest and usually is not. Margins are measured in single percentage points, so a two-point drift in food cost is the difference between a good year and a loss. Payroll is the largest expense and the most heavily regulated. And unlike almost any other retailer, a restaurant handles money that is not its own.

What is different about restaurant accounting

Tips are a payroll question, not a courtesy

The treatment turns on control. Tips paid directly by a customer to a server, with the employer not involved, are the employee’s income to report. Tips that pass through the employer — pooled, allocated, added to a card payment and redistributed, or subject to a house policy — are generally treated as controlled tips, which brings them into pensionable and insurable earnings and onto the payroll remittance. Getting that distinction wrong is one of the more expensive assessments in the sector.

Revenue is a daily summary, not an invoice

Sales come from the point-of-sale system as daily totals split by category, tender, tax, tips, comps, voids and discounts. Gift cards are not revenue when sold but a liability until redeemed, and delivery platforms report gross sales while depositing net of commission. A restaurant’s books are only as good as the daily sales journal behind them.

The menu is not uniformly taxable

Prepared meals and restaurant service are taxable, while certain packaged and basic grocery items are zero-rated, so a cafe selling both a latte and a bag of beans is applying two treatments. Alcohol carries its own provincial markup and, in some provinces, its own sales tax. Point-of-sale tax mapping is therefore a compliance control, not a setup detail.

Food cost is the number that decides the year

Cost of goods sold depends on a real inventory count, valued consistently, with waste, spoilage, staff meals and comps identified rather than buried. Counting monthly rather than annually is what turns food cost from a year-end discovery into something a manager can act on while the year is still running.

Payroll is heavy and constant

High turnover means a continuous stream of new hires, records of employment and year-end slips. Statutory holiday pay, minimum-wage tiers, provincial employer health taxes and workers’ compensation premiums all apply, and the remittance schedule tightens as payroll grows. More restaurants fall behind on source deductions than on any other filing.

Renovations are capital, and tied to the lease

Leasehold improvements — the build-out, the kitchen, the fit and finish — are written off over a period linked to the lease term rather than expensed. Equipment sits in its own class, and franchise fees and royalties have their own treatment. A renovation planned around a lease renewal is a tax decision as much as a design one.

The guides and pages for this vertical

Tips and payroll

• Tip reporting and payroll — controlled versus direct tips, and what has to run through the payroll account. Read it before the next pay run.
• Payroll services — what running restaurant payroll properly involves at scale.
• Payroll remittances — the RP account, remittance frequency and what happens when it slips.
• Records of employment — the filing that follows every departure in a high-turnover business.
• Hiring your first employee — the accounts and obligations that start with the first hire.
• BC employer health tax — the provincial payroll tax that applies once payroll passes the threshold.
• WorkSafeBC registration — kitchen and front-of-house coverage, and the premiums that follow.
• Slip filing deadlines — the February deadlines that arrive immediately after a slow January.
• Payroll deduction calculator — estimates deductions on a pay run. Useful when modelling a wage change.
• Remittance calculator — estimates what has to be sent to CRA and when.

Food cost, inventory and margin

• Inventory accounting — valuation and cost of goods sold, applied to food and beverage stock.
• The year-end inventory count — what has to be counted and how the count is documented.
• Writing off bad debts — for catering, events and house accounts that go unpaid.
• Prepaid expenses at year end — insurance, licences and rent paid ahead, and how they are split between years.

Sales tax and deductions

• Zero-rated versus exempt supplies — why part of a cafe menu is taxable and part is not.
• BC PST for small business — the provincial tax on liquor and certain goods alongside GST.
• GST/HST calculator — checks the tax on a mixed order or a catering invoice.
• The 50% meals rule — the limit on business meals — and why it does not apply to food that is your inventory.
• Input tax credits — recovering tax on food purchases, equipment and the build-out.

Assets, structure and city pages

• Capital cost allowance — equipment and leasehold improvements, and the periods each is written off over.
• Restaurant accountant, Toronto — framed for Ontario operators, where HST applies at a single rate.
• Abbotsford accounting — the local page for Fraser Valley businesses.
• CRA audit triggers — why cash-intensive businesses attract more attention, and what reduces it.
• Catch-up bookkeeping — for an operation where the daily sales journal stopped being reconciled a while ago.

Who this fits

This hub is written for incorporated restaurants, cafes, bars and pubs, quick-service and franchised outlets, caterers, food trucks, bakeries with a retail counter, and small hotels or short-stay accommodation operators with a food component. It applies to a single location as much as to a small group. Ghost kitchens and delivery-only brands share the payroll and food-cost questions while facing the platform reconciliation issues more acutely.

How this runs remotely

EverStone CPA is a sole-practitioner CPA firm at 32615 South Fraser Way in Abbotsford, BC, and works fully remotely. Hospitality data is already digital: the point-of-sale system exports daily sales, the payroll platform holds the pay history, and supplier invoices arrive by email. None of it requires an office visit, which matters in a business where the owner is on the floor at every hour an accountant would normally be available. Meetings happen by video before service or after close, and filings go directly to CRA.