Questions
Straightforward answers to questions small business owners ask about bookkeeping, taxes, payroll, and making sense of their numbers.
How do I track food cost percentage at the end of each week using QuickBooks?
Use the formula Beginning Inventory + Purchases - Ending Inventory = COGS, then divide by food revenue. Set up QuickBooks with the right accounts and record a weekly inventory count so you can run this calculation consistently.
Read answerShould I use a daily sales journal or just record bank deposits for my restaurant?
Use a daily sales journal with a sales clearing account. Recording bank deposits as revenue understates your actual sales and hides where money goes between the POS and your bank account.
Read answerHow do I account for tips as a liability until they're paid out to employees?
Create a Tips Payable liability account and credit it every time tips are collected. When tips are disbursed through payroll, debit Tips Payable to clear the balance. Florida allows passing credit card processing fees on tips to employees, but this requires careful tracking.
Read answerHow do I calculate the true cost of a menu item including ingredients, labor, and overhead?
Start with the plate cost by totaling ingredient costs per portion. Then layer in labor allocation and overhead. Most restaurants aim for 28-35% food cost on the plate, but when you add labor and overhead the total should stay under 65%.
Read answerWhat is prime cost in a restaurant and why is it the most important number to track?
Prime cost is your total cost of goods sold (food and beverage) plus your total labor costs (wages, benefits, and payroll taxes). It should fall between 55% and 65% of total revenue, and it matters more than any other number because it covers the two largest controllable expenses in your restaurant.
Read answerHow do I reconcile my POS system sales report with what actually hits my bank account?
Your POS total and bank deposit will almost never match. The difference comes from credit card processing fees, timing delays, tips held for payroll, comps and voids, and cash variances. A sales clearing account is the cleanest way to track and reconcile these gaps.
Read answerHow should a bar owner track pour cost and spot liquor inventory variances?
Calculate pour cost by dividing the cost of liquor used by liquor revenue. Industry standard is 18-24%. Track variances by comparing physical inventory counts against POS drink sales, and investigate anything over 3-5%.
Read answerHow does a food truck owner handle bookkeeping differently than a restaurant?
Food truck bookkeeping revolves around tracking revenue by location, managing vehicle expenses, handling commissary kitchen costs, and staying on top of variable event fees and permits. The mobility that makes the business model appealing is exactly what makes the financial tracking more complex than a fixed-location restaurant.
Read answerHow do I set up a chart of accounts in QuickBooks that makes sense for a restaurant?
The default QuickBooks chart of accounts doesn't work for restaurants. You need separate accounts for food costs, beverage costs, labor by role, and restaurant-specific operating expenses so your reports actually show where the money is going.
Read answerHow does Florida sales tax apply differently to dine-in food, takeout, and alcohol?
In Florida, most food sold by restaurants is taxable at the full rate whether it's dine-in or takeout. Alcohol is always taxable. The real distinction is between prepared food and grocery-type items, not how the customer receives it.
Read answerHow do I track catering revenue separately from dine-in and delivery sales?
Set up separate income accounts in your chart of accounts for each revenue stream. Every transaction gets posted to the correct account so your profit and loss statement automatically breaks down how much each channel brings in.
Read answerWhat financial reports should a restaurant owner look at every week, not just every month?
Restaurant owners should review their cash position, labor cost percentage, food cost estimates, and sales trends weekly. Waiting until month-end to spot problems in a restaurant is waiting too long.
Read answerHow do I track daily cash sales and deposits when my restaurant handles a lot of cash?
Use a daily cash reconciliation sheet that calculates expected cash on hand from your POS report, then compare it to your actual count. Record any over/short amount, deposit daily, and match your deposits to the reconciliation.
Read answerHow do I account for food waste and spoilage so it shows up on my P&L?
Create a separate expense line under Cost of Goods Sold specifically for waste and spoilage instead of lumping it into food purchases. This makes waste visible on your P&L so you can actually measure it, manage it, and spot problems early.
Read answerWhat are the most common bookkeeping mistakes restaurant owners make in their first year?
The biggest mistakes include mixing personal and business finances, not tracking food costs at the item level, falling behind on sales tax, and failing to reconcile POS reports with bank deposits. Most of these are preventable with the right systems from day one.
Read answerWhat's the difference between FIFO, LIFO, and weighted average for inventory valuation?
FIFO records the oldest inventory costs as cost of goods sold first, LIFO records the newest costs first, and weighted average blends all costs together. The method you pick directly affects your reported profit and tax liability.
Read answerHow often should my business do a physical inventory count and how do I record adjustments?
Most businesses should count inventory at least quarterly, though the right frequency depends on your volume, industry, and how much shrinkage risk you face. Adjustments get recorded as changes to your inventory asset and an offsetting shrinkage expense.
Read answerHow do I track cost of goods sold when my supplier prices change every order?
Use a consistent inventory costing method like weighted average or FIFO. QuickBooks Online calculates FIFO automatically when inventory tracking is enabled, so your COGS stays accurate even as purchase prices shift.
Read answerWhat causes inventory shrinkage and how does it show up in my bookkeeping?
Shrinkage happens when your physical inventory count is less than what your books say you should have. The most common causes are theft, damage, spoilage, receiving errors, and miscounts. You record the difference as an inventory adjustment that flows into cost of goods sold or a dedicated shrinkage expense account.
Read answerHow do I set up inventory tracking in QuickBooks Online without making it overly complicated?
Enable inventory tracking in QBO settings, create inventory-type products with accurate costs and starting quantities, and only track items you actually sell. The biggest mistake is trying to track everything.
Read answerHow do I account for damaged, expired, or obsolete inventory in my books?
You remove the value from your books through a write-down or write-off. This means debiting an expense account and crediting your inventory asset account, with documentation to support the adjustment.
Read answerHow does my inventory valuation method change what shows up on my profit and loss?
Your valuation method determines which costs get assigned to the products you sold, directly changing your cost of goods sold and gross profit. When costs are rising, FIFO shows higher profit while LIFO shows lower profit.
Read answerWhen does a business actually need professional inventory accounting vs a spreadsheet?
A spreadsheet works fine when you carry a handful of products and restock infrequently. Once your SKU count grows, you sell across multiple channels, or your inventory value is large enough to distort your tax return if it's wrong, it's time for something more structured.
Read answerHow do I track raw materials vs finished goods in QuickBooks for a small manufacturer?
Set up separate sub-accounts under your Inventory Asset account for raw materials and finished goods, create individual inventory items mapped to each, and use inventory assemblies or a third-party app to move costs from materials to finished products when you build.
Read answerWhat's the best way to record monthly inventory adjustments in QuickBooks Online?
Use the Adjust Quantity feature under Products & Services in QBO. Enter your physical count, and QuickBooks calculates the variance automatically and posts it to an expense account like Inventory Shrinkage.
Read answerHow do I reconcile Amazon FBA settlement reports with what shows in my bank account?
Amazon deposits a net settlement amount after deducting fees, returns, reimbursements, and reserves. You need to break that single deposit into its component parts so your books reflect actual revenue and actual expenses.
Read answerHow does sales tax nexus work for a Florida-based e-commerce seller shipping to other states?
Your Florida location creates automatic nexus in the state, but you likely owe sales tax in other states too. Since the 2018 Wayfair ruling, any state where you exceed economic nexus thresholds can require you to collect and remit sales tax.
Read answerWhat's the best way to connect Shopify to QuickBooks Online without double-counting sales?
Skip the native Shopify-QBO sync. Use a summarization tool like A2X or Klayena that posts daily sales summaries as clean journal entries, breaking out gross sales, discounts, refunds, shipping, taxes, and fees properly.
Read answerHow do I categorize Amazon FBA fees, storage fees, and referral fees in my books?
Create separate expense accounts for each major fee type. Lumping them into one 'Amazon Fees' account hides where your margins are actually going and makes it impossible to control costs.
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