Restaurants often fail from mistakes in office work. Owners try to do too much and fail to delegate tasks or they ignore key areas such as paperwork and accounting, which leads to theft, getting in trouble with government agencies and losing control of finances.
Restaurant work requires competence in multiple areas, but many owners undertake challenges that they are ill-equipped to handle. Entrepreneurs typically try to cook, keep the books, design advertising, manage people, make repairs and establish warm connections to customers. Paperwork problems often take unreasonable amounts of time and swamp managers with employee, government and investor demands for information.
Restaurant owners rarely have Human Resources staff. Frequently, restaurant owners do not spend sufficient time learning the subtle points of personnel paperwork, whether it is records or government forms. This is a recipe for disaster.
Keeping Accurate Payroll Records Takes Time
Payroll records take more time than any other area of restaurant accounting. Company insurance rates depend on accurate payroll data, and federal, state and local governments require regular reports, tax withholding, child-support payments and wage garnishments that depend on accurate figures. Agencies require that restaurants maintain records for certain numbers of years so that accurate information is available for grievances, unemployment claims, Social Security payments and lawsuits.
Surviving the demands of generating timely and correct reports could prove frustrating to people who are more comfortable working in the kitchen or mingling with the customers instead of handling detailed paperwork. Restaurant accounting software helps to keep accurate records, but someone must still input accurate data into the proper forms. Payroll services help to handle all the messy details of figuring out multiple-garnishment protocols, health-insurance policies, benefits packages, and insurance and agency audits that restaurants routinely face.
- The IRS requires that restaurants keep certain records, which include I-9 forms, payroll records, documentation, W-2 forms and 1099 forms for vendors and service workers.
- Each level of government requires tax deposits in timely fashion such as general sales taxes, payroll withholding, food and beverage taxes and unemployment insurance assessments.
- Ordering supplies effectively depends on keeping organized inventory records. Also, tracking employees who oversee the records needs to be in place.
- Restaurant paperwork includes basic accounting that owners need to file tax returns, monthly and quarterly reports and loan applications.
- Owners have to be aware of steps that must be taken before hiring someone to verify someone as a legal worker in the United States. Social Security numbers are useless if they are fraudulent so a restaurant owner needs to know their obligation in regard to running government background checks.
- Organized records prove financial details to insurance companies, social service agencies and employers who request employee job references.
- Courts from local jurisdictions and other states often request child-support payments, back-tax assessments and wage garnishments.
Sloppy Records Lead to Employee Theft
Employers who keep good records, take accurate inventories and monitor employee behavior suffer fewer thefts and losses of inventory. Basic accounting controls help to identify losses caused by outright theft, mismanagement and company waste. The accounting procedures should be attached to individual employees so a manager has some idea who to hold responsible.
- Small restaurants often experience minor and major thefts because owners trust the wrong people.
- Using strong accounting and payroll software puts people on notice that cash, inventory and guest checks get monitored, serving as a deterrent to theft and fraud.
- Owners need to establish cash-handling procedures to prevent thefts in the front of the house. Sales reports, taking regular register readings and changing cash drawers periodically help to identify the employees that are responsible for cash shortages.
- Inventory controls help to track ingredients from the time they enter restaurants until kitchens send out the food to customers.
- Information security is also an important factor. Poor records or lax computer security could lead to identify theft and liability for restaurant owners.
Key Paperwork Organizational Tips
Business owners have a legal responsibility to keep good records of employees, payroll, expenses, capital equipment costs, depreciation and maintenance and service schedules.
- Organized offices mean that managers and authorized staff can find information quickly.
- Compiling personnel documentation helps speed up audits, employee reviews and hiring practices.
- Accurate paperwork gives owners the tools they need to make better management decisions.
- Management should keep accurate files for each employee that include I-9 documentation, government correspondence, original job applications, salary and work histories, references and contact information including next-of-kin contacts.
- Best practices include limiting employee access to records with keys and pass codes.
- In the restaurant industry, it takes an average of 18 months to catch employees who steal, pilfer, embezzle or misrepresent their qualifications. Organizing records and paperwork reduces the time needed to uncover employee problems.
Paperwork Concerns Generated by the Affordable Care Act
The Affordable Care Act adds new levels of paperwork and bureaucracy for swamped restaurant owners, and accurate paperwork could help to generate insurance incentives, reduce operating costs and qualify restaurants for tax credits of 35 to 50 percent on their health-insurance premiums. Restaurants with more than 50 full-time employees could face penalties of $2000 per employee for failing to carry health insurance. This is an immediate issue and involves research and professional assistance.
Restaurants need POS systems, management software, outsourced payroll services or experienced accountants to handle their paperwork, file government reports, manage health-insurance problems and deal with payroll issues. The benefits of good paperwork include transparency, increased profits and better management of people and resources.