Accounting for restaurants and hospitality

Making food for wholesale or retail? See accounting for food manufacturers.

Hospitality needs the tightest accounting and rarely gets it. With single-point margins, a two-point food-cost drift turns a good year into a loss. Payroll is the biggest, most regulated cost. And a restaurant handles money that is not its own.

What is different about restaurant accounting

Food service means thin margins, high turnover and a rare payroll question: which tips pass through the business and attract source deductions. Add spoilage and item-by-item sales tax.

Related: Accountant for craft breweries, cideries and distilleries.

Tips are a payroll question, not a courtesy

It turns on control. Tips paid straight to a server are the employee’s to report. Tips that pass through the employer — pooled, allocated, paid out from card sales or under a house policy — are generally controlled tips, part of pensionable and insurable earnings. Getting this wrong is a costly assessment.

Revenue is a daily summary, not an invoice

The POS gives daily totals by category, tender, tax, tips, comps, voids and discounts. Gift cards are liabilities until redeemed, and delivery platforms deposit net of commission. The books are only as good as the daily sales journal.

The menu is not uniformly taxable

Prepared meals are taxable but some basic groceries are zero-rated, so a latte and a bag of beans are taxed differently. Alcohol adds provincial markups and sometimes its own tax. POS tax mapping is a compliance control.

Food cost is the number that decides the year

Cost of goods sold needs a real, consistently valued count, with waste, spoilage, staff meals and comps shown. Monthly counts let a manager act on food cost mid-year.

Payroll is heavy and constant

Turnover means constant hires, records of employment and slips, plus stat pay, wage tiers, employer health taxes and workers’ compensation, with remittances tightening as payroll grows. Restaurants fall behind on source deductions more than any other filing.

Renovations are capital, and tied to the lease

Leasehold improvements are written off over a period tied to the lease, not expensed; equipment, franchise fees and royalties each have their own treatment. So renovating around a lease renewal is a tax decision.

The guides and pages for this vertical

Tips and payroll come first, because that is the question food service asks more than any other, followed by the ordinary services and the local pages.

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 — the local page for Fraser Valley businesses.
• CRA audit triggers — why cash-intensive businesses attract more attention, and what reduces it.
• Years behind, brought up to date — for an operation where the daily sales journal stopped being reconciled a while ago.

Who this fits

For incorporated restaurants, cafes, bars, quick-service and franchise outlets, caterers, food trucks, retail bakeries and small hotels with food service, single site or small group. Ghost kitchens share the payroll and food-cost issues, with more platform reconciliation.

How this runs remotely

EverStone CPA is a virtual, one-CPA firm. Hospitality data is digital already: POS exports, payroll history, emailed invoices. No office visits for an owner on the floor; video meetings before service or after close, and direct CRA filing.