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Posts Tagged ‘Taxes’

I’m almost finished with Groupon articles!  I’ve got two more, then, I think we’re done.  I’ve been writing these articles, because there is a lot of confusion surrounding the accounting for Groupon certificates and how to enter them in QuickBooks.  The resources for learning about these areas are poor (and often contradictory), but that’s nothing compared with the confusing, and often downright incorrect, information that has been written about the tax implications of using Groupon!  I hope these articles will help accountants, bookkeepers and restaurant owners set up their books and account for these transactions properly.

Today’s article explains how to account for a restaurant’s Groupon transactions in QuickBooks.  Previous articles have covered the POS system set up for Groupon transactions, accounting for Groupon transactions (in general), and the very important tax implications of using Groupon in a restaurant.

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This is the second article in a series about Groupon coupons for restaurants.  The first article covered accounting for Groupon transactions.  This piece covers how to set up your Point of Sale (POS) system to record POS systemredemptions of coupons.  Failing to do so properly could result in the restaurant being on the hook for a lot of sales tax, penalties and interest!

In the first article, we learned that HST applies to the “promotional value” of the Groupon coupon.  In our example, the coupon was worth $100 of meals, and the customer purchased it for $50, which was paid directly to Groupon.  The promotional value of the coupon is the $50, even though the restaurant does not receive this amount from Groupon.  So, when the customer orders $100 worth of meals and drinks at a restaurant, she will have to pay tax on $50, but she will receive a credit for $100 (face value of the coupon).

Restaurants that use Groupon (or other similar programs) may need to update their POS systems to properly account for these transactions.  Many POS systems can be easily modified by the user to make these changes, but some require programming by the developer (which can take time).  Here are the changes you will need.

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Today’s post asks, are all thefts equal?  I’ve listed four common forms of theft in restaurants and bars.  If the amount of theft is equal in each case, is the cost to the restaurateur the same?  If you think each one has the same impact on the restaurant or bar, read on.

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On this blog, I mainly talk about controlling costs in restaurants.  When we look at sales taxes that restaurants pay, we rarely consider them to be “costs”.  Sales taxes are considered “trust” taxes.  Restaurants, retailers and other businesses that charge sales taxes are really collecting them on behalf of the government.  This means that sales taxes are not revenues and the remittance of sales taxes is not an expense.

So, it should be obvious that restaurants don’t have sales tax expenses.  However, many restaurants do have sales tax expenses!  I’m going to tell you how.

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Recently, the Canadian Restaurant and Foodservices Association (CRFA) published three calculators to help restaurateurs determine the effect of the new HST, effective July 1, 2010, on their prices.  The calculators cover wine, spirits and beer.  I’ve included the links, below.  Perhaps a short note is necessary to help you use them properly.  They are set up for “typical” value, medium and premium priced examples.  Unfortunately, you aren’t able to change the net cost figures, but they will give you an idea as to the effects on your prices and the price that your customers will be paying come July.

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I’ve been involved in the restaurant business for over 20 years, both as a chartered accountant advising restaurateurs and as an owner operator.  I started this blog to help restaurateurs improve their operations with practical information.  While I have advised a variety of different restaurant operations from fast food to fine dining, my focus is mostly in the area of licenced, full-service restaurants. 

Despite being “small” businesses, restaurant operations are surprisingly complex.  They offer a wide variety of products, using hundreds of ingredients, purchased from numerous suppliers.  The product mix needs to have some uniqueness to distinguish one restaurant from the multitude of competitor operations.  There are huge number of small sales from a team of changing salespeople.  Many of the products are “manufactured” and the prices of many ingredients change frequently.  Manufacturing needs to be closely matched to sales, because many of the ingredients are perishable, yet sales volumes are notoriously difficult to forecast.  Restaurants must comply with a variety of laws and regulations covering virtually every aspect of their business.  All this, and we haven’t even touched on how restaurants attract and retain customers.  Finally, there are several catastrophic risks that need to be managed every single day. 

The complexity of restaurant operations means that there is no shortage of topics to discuss!  As an accountant, my specialty is cost control, and you will find a wealth of practical advice to help you better manage costs in your restaurant.  The recent economic downturn has made effective cost control the single most important aspect of operating a successful restaurant.  My experience is that very few restaurateurs establish and maintain effective control over their costs.  My hope is that this blog will motivate more owners undertake this very important activity. 

My sister blog, Canadian Restaurant Tax Advisor, provides a comprehensive source of information about restaurant taxes and how to prevent unfair tax audit reassessments.  If you haven’t visited this site, I strongly urge you to take advantage of this valuable source of information that could save you thousands of dollars.

I’ve started a Linked-in Group for Canadian restaurateurs to discuss important issues.  You can join by visiting Linked-in and searching for “Canadian Restaurateur”.

I welcome your comments and questions.

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