Balance Sheets & Financial Statements 101


balance sheet of a restaurant

Too much debt on the balance sheet shows you may default on debt or declare bankruptcy. Using this accounting statement, you can easily identify these issues in advance and avoid long-term financial troubles. With these tools on hand and the help of our handy restaurant balance sheet template, filling out your restaurant balance is a breeze. A more tangible way to think about a restaurant balance is to imagine this statement as a set of scales. Your assets (everything your restaurant owns) sits on one side, and your liabilities (everything you owe) sits on the other. Calculating your balance will show you where you sit on this scale to help you better understand if you’re making a profit, breaking even, or losing money.

balance sheet of a restaurant

Know Your Worth: Understanding a Restaurant Balance Sheet and Other Financial Statements

Your balance sheet and p&l need to work together to show your restaurant’s financial health accurately. Understanding the difference between your restaurant’s liabilities and your assets is crucial. Liabilities are what your business owes to others, like loans or bills. Equity is what’s left over when you subtract your restaurant’s liabilities from your assets. A balance sheet for restaurants is a key financial statement that lists your restaurant’s assets, liabilities, and equity at a given point in time.

How to create a balance sheet

If you’re thinking a profit-and-loss (P & L) statement is enough, you’re not quite right since a P & L statement is basically just an account that shows your revenue and expenses. This single sheet gives you insight into your restaurant’s financial health, guidance on how to increase revenue, and insight into your restaurant profit margin, the most important restaurant KPI. FreshBooks offers a balance sheet, general ledger, COGS report, Account Payable, Chart of Accounts, Journal Entries, and access to professional accountants ready to tackle any problems that arise.

Assets: what you own

  • Your POS system tracks your restaurant’s activity, and the POS reports deliver a wealth of information.
  • Restaurants with less than $1 million in profits can choose between cash or accrual accounting.
  • A restaurant balance sheet provides an overarching view of the financial health of your restaurant.
  • You can connect with a licensed CPA or EA who can file your business tax returns.

With a restaurant balance sheet template to go by, it’s easy to keep track of your operations and plan for the future. But did you know that it’s also just as easy to find qualified talent to work shifts at your restaurant? With Qwick, you no longer need to worry about filling shifts or being understaffed. And, with that restaurant balance sheet template filled out, Qwick can help you quickly pay those workers and keep tabs on outlays.

  • Put simply, it shows the net worth of your restaurant at a given point in time.
  • Creating and maintaining a restaurant balance sheet is a great way to understand and map out your business’ finances, so you’re not left with any unwelcome surprises at the end of the year.
  • When finding these figures for your P&L statement, one of the first places you should look is your point of sale (POS) system.
  • A restaurant profit and loss statement, also called a P&L, is a financial document detailing the total revenue and expenses over a predetermined period of time.
  • You can quickly check your restaurant’s solvency by looking at the equity on your balance sheet.

The result is a number that gives you a rough idea of your restaurant’s finances and performance over time. Download this free balance sheet template to track your restaurant’s assets, liabilities, and equity. To help make restaurant balance sheets a little easier to understand, here’s an example of how creating one works. Read on to learn what a restaurant balance sheet is, how it differs from a profit and loss statement, and how to create one yourself. For restaurants to be profitable, most business operators look for the food costs to be between 28 and 35 percent of the revenue.

How to Create a Restaurant Balance Sheet to Forecast Cash Flow

This information can help you make sense of how much money you’re making. You can pull reports for specific times to see when you earn the most. This is a great way to understand your business better and make smart choices. POS systems can also track things like petty cash, making it easier to verify the accuracy of your cash flow.

  • Your financial statements, such as your restaurant balance sheet and profit and loss (P&L) statement, aren’t just records of sales of profits, but ways to better understand your business.
  • Setting aside the time to create a restaurant balance sheet and P&L statement is the best way to stay on top of your finances and spot any trends that might be occurring.
  • A balance sheet shows the net worth of a restaurant at a certain moment in time, detailing your restaurant’s assets, liabilities, and equity.
  • This detailed look is used to forecast short-term and long-term financial strategies.
  • In this video I walk you through the process of creating a balance sheet for your restaurant and even problem solve with you when your balance sheet doesn’t balance.
  • It can help you balance your expenses, liabilities, and profits, and put you on the path to long-term success.

balance sheet of a restaurant

All of the restaurant’s assets are listed in the left column and all liabilities in the right column, along with their respective totals. Long term liabilities aren’t that common in restaurants as they refer to long term financial obligations like capital leases, long term rent agreements or deferred income tax. However, if your restaurant has any of these liabilities, be sure to list them within this subcategory on your balance sheet.

balance sheet of a restaurant

Restaurant liabilities are what a restaurant owes for a certain period of time, like outstanding vendor bills, rent for property or equipment, lines of credit, or loans. Every restaurant, big or small, faces unique financial challenges – unstable food costs, seasonal income variations, how to do bookkeeping for a restaurant high overheads, and more. If you’re in the restaurant biz you’ll know how important it is to stay on top of your finances. With profit margins for Aussie restaurants averaging a razor thin 2%, knowing exactly how much money is coming in versus what’s going out is a fine balancing act.

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