Recordkeeping for Your Restaurant
It is absolutely vital in any type of business for business owners to keep precise and organized records regularly. Recordkeeping is important for many reasons, as it works to ensure you always know where money is going and from where it is coming. At RPA, we work to advise our clients on the best practices for maintaining their recordkeeping. Below are some of the main reasons why recordkeeping is important for restaurant owners.
Tracking Expenses will Save You Money
When keeping proper records, you should track where money is coming in to your restaurant, and where all expenses are produced. When tracking these expenses, you may begin to notice trends in which expenses are outnumbering the money coming in, or where you have room to invest in areas that are bringing in a lot of money. For example, you may notice most of your expenses going toward your wait staff, but you are particularly slow during the afternoons. With this knowledge, you can cut back on staff during slow periods of the day and save a significant amount of money. Without proper recordkeeping, you wouldn’t be able to identify the “slow” times or know how much you are really spending on overhead costs.
Protection During a Lawsuit
Unfortunately, restaurant owners may face a lawsuit while running their business. Regardless of when or why a lawsuit occurs, being able to show detailed records of all business operations can help protect your business against many litigious claims. Without recordkeeping to support your defense, you may have no defense at all.
Understand Which Coverage You Need
Recordkeeping can help you determine which kinds of insurance coverage your restaurant needs. While you most likely already have all the basic overage your restaurant needs, recordkeeping may show areas where coverage would help you save money.
Make Better Business Decisions
Recordkeeping allows you to make better business decisions as the owner of a restaurant. It helps you determine what should be kept on the menu, which services you need to expand within your restaurant and areas where there is room for improvement. Recordkeeping may also show you that you are losing money fast, and it may be time to back out. Or, it may tell you just the opposite, giving you a strong foundation to expand your restaurant business in other locations.
You Want to Sell Your Restaurant or Expand
If you are looking to sell your restaurant or expand to other locations, recordkeeping is a vital part of being able to close on a deal. Potential buyers will want to know the ins and outs of your business – things for which they will need solid proof, not just your word. Recordkeeping will show potential buyers and investors the good, bad and ugly of your business, so that they are able to make an informed decision. It will also help you, as a restaurant owner, gain more insight into your business and how you want to position your restaurant in the future.
It is the Law
Lastly, plain and simple, recordkeeping is the law for business owners. It is required under tax law for anyone who owns a business to keep detailed financial records that explain all business transactions. Not only do records need to be maintained each year, but those must be retained for at least five years. This requires an extremely organized recordkeeping system to ensure your establishment is following all tax laws and staying “on the book.”
Speak with the Restaurant Insurance Professionals
When looking to secure your restaurant’s profitability well into the future, restaurant insurance is absolutely necessary. When you work with the professionals at RPA, you are working with a team of professionals whose sole focus is on the restaurant industry in the United States. This allows us to guide and consult restaurant owners on several different aspects of their business. Contact us today for a free quote and to learn more about how we can help protect your restaurant.