Restaurants are my favorite example businesses; they’re so pure.
And by pure, I mean—people don’t open restaurants because of their love of money. No, they open a restaurant because they love food and feeding people and making diners say, “Mmmm. Mmmhmm.”
It’s the perfect example of a business that software can help. It helps by getting all the paperwork nonsense out of the way, so a chef or owner can focus on making those people happy.
While every type of business has its unique concerns, restaurants have a whole laundry list of specialized accounting issues most people outside the food business never think of:
- Food goes bad
- Recipes affect profitability
- People get paid wages and tips
- A robust POS (point of sale) is a must
Finding the right restaurant accounting software isn’t an ordeal, but you do need to make sure you’re ticking all the right boxes.
Today, we’ll look at important features restaurants should be on the lookout for, discuss how they should affect your buying decision, and talk about getting the most out of your system.
6 essential accounting software features for restaurants
There are a million different features you’ll come across during your software search, but these six are absolutely essential to any restaurant’s success.
The most important feature you should be looking for when choosing accounting software is flexibility.
You’re not going to find the perfect stand-alone software, so you’ll need to be able to integrate to make it all work. Most of the big—and many of the small—accounting software packages out there support heavy integration.
As a restaurant, you should look for inventory, payroll, and POS integrations, specifically.
2. 1099 capabilities
After flexibility, you need something that makes managing 1099s as easy as possible. You have to send a 1099 to any person or business you’ve paid $600 or more to at the end of the year (so, every supplier you work with). Having accounting software that tracks payments and generates 1099s for the vendors that need them will save you a ton of time, come January.
3. Cloud-based deployment
You’ll also want something could-based. I love the cloud. I don’t always recommend it—because everyone has a different workflow and comfort level with security—but for restaurants, cloud is a must.
The world you’re working toward is one in which you work just 80 hours a week. The restaurant is open from 10 a.m. to 12 a.m., seven days, every week. That’s 108 hours of open doors, not counting prep and closing time. Some of your work, oversight, and anxious pacing is going to have to happen offsite.
With a cloud system, you can get real work done remotely, instead of just fretting about the work you have left to do. (Please don’t tell your spouse this was my idea.)
4. Accountant approval
Any accounting system you buy should have the seal of approval from your accountant.
Wait, back up. You need an accountant.
Alright, now it should have the seal of approval from your accountant.
5. Inventory management
Look for accounting software that has a strong inventory management component. While you can often add this on with a third-party integration, inventory is one of the more common core features. You should be able to find a powerful solution with inventory built in.
6. Reporting tools
Finally, you want accounting software with great reporting capabilities. Restaurants need constant insight into their operations, looking for profitable items, buying patterns, and ways to keep costs under control. A good set of reporting tools can help you identify those areas quickly.
Picking the right restaurant accounting software
In the past, you had to make a three-way trade-off when buying software, between cost, power, and usability.
The twist is that a new set of cloud-based options, offered for “free,” gives you some ability to break out of that cycle. (Free is in quotes because the cost usually comes in the form of information about your buying habits, which not everyone loves giving up.)
Most software, though, still requires a balancing act. For restaurants, the key to success can be found in integration, which I would prioritize over almost any other capability. Being able to build a strong core accounting system, surrounded by supporting software to handle the detailed tasks, is a big win.
Of course, you’ll run up against cost limitations. One of the many benefits of integration is that you can focus on getting a solid, stripped down core system and add on functionality as you need it.
These days, you can get everything from payroll to expense management as add-on features, allowing you to get into most systems for very little cash. For instance, you can get the totally solid versions of QuickBooks Online or Xero for $35 and $30 per month, respectively.
That adds up to just a handful of hours of employee wages each month, and you get to keep your business in order.
After that, you can start adding on those other features as you need them or as you have the free capital. There’s no need to bite off more than you can chew.
Getting the most out of your accounting system
Once you’ve picked your system and have it up and running, the first step to success is linking your accounting with your POS. Daily sales reports are one of the most important views you can gain into your business, and linking your POS to your accounting software makes those reports easier to run and more powerful.
You’ll also link up—or fire up, if it’s included in the accounting package—your payroll software. This makes it easy to manage employee taxes, tip divisions, and budgeting. The accounting software can manage the reporting side of this, allocating costs to the right accounts and tracking actual costs versus your budget.
The payroll integration will manage the tax calculations, compliance, and most of the other HR specific tasks.
As your last setup task, you’ll integrate—or, again, fire up—that sweet, sweet inventory management system. Tracking how much product you have, how quickly it rotates through your business, and how much it costs will make or break you.
Good restaurants that inexplicably close their doors do so not because demand is low, but because the food people are buying isn’t adding enough to the business’s bottom line. Inventory systems, tied into your accounting solution, can help fix that problem.
Go forth and feed the world
Now that you know what you need, you can go out and find a solution that works for you. Check out Capterra’s accounting software directory or our rundown of some great free accounting software options.
And remember, before you drop a bunch of time and money into any software, talk to your accountant to make sure you’re covering all your bases.
Looking for Accounting software? Check out Capterra's list of the best Accounting software solutions.